Business
1. Considering the information below, which security would plot above the Security Market Line (SML)?
Security CAPM-predicted return Investor’s expected return
A 15% 13%
B 15% 15%
C 15% 17%
Group of answer choices
Security C
Security B
Security A
2. If the simple CAPM is valid, which of the following situations is possible and why? Consider each situation independently
Situation 1:
Portfolio Expected Return Beta
A 30% 1.6
B 40% 1.3
Situation 2:
Portfolio Expected Return Standard Deviation
A 20% 30%
B 25% 15%
3. Which of the following types of risk is diversifiable? Select all that apply Group of answer choices
An armed conflict between two countries
A strike by workers at a factory
Failure by a company’s new product launch
A shift in monetary policy
