You Are Given Three Investments with the Same Level of Risk

question 20

Multiple Choice

You are given three investments with the same level of risk. Two of the investments have relatively the same level of return. The third investment has a return that is relatively higher than the other two investments. Assuming that the two investments with the same level of return lie on the SML, how would you classify the third investment?

• A) ``Over-sold``, investors rush to buy it
• B) ``Over-bought``, investors rush to sell it
• C) ``Over-sold``, investors rush to sell it
• D) ``Over-bought``, investors rush to buy it

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Definitions:

Japanese Reindustrialization

The period or process of Japan revitalizing its industrial sector, focusing on high technology, efficiency, and export-oriented production.

Luxury Items

High-end products or services that are considered superior in quality and status, often associated with a significant price.

Economic Power

The ability of a country, business, or individual to influence or control economic activities, markets, and outcomes due to their financial resources, production capabilities, or market position.

Total Output

The total value of all goods and services produced within an economy over a specific period, often used as a measure of economic performance.