A Stock with an Actual Return That Lies Above the Security

question 46

Multiple Choice

A stock with an actual return that lies above the security market line has:

• A) more systematic risk than the overall market.
• B) more risk than that warranted by CAPM.
• C) a higher return than expected for the level of risk assumed.
• D) less systematic risk than the overall market.
• E) a return equivalent to the level of risk assumed.

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Definitions:

Directors

People selected by the corporation's shareholders to supervise the administration and strategize decisions for the company.

Shareholder's Meeting

A gathering of a company's shareholders where important issues are discussed, and decisions are made about the company's affairs.

Proxy

Authorization to represent a corporate shareholder to serve as his or her agent and vote his or her shares in a certain manner.

Greater-Than-Majority Vote

A voting requirement in decision-making processes that necessitates more than 50% of the votes to pass a motion or make a decision.