According to the Capital Asset Pricing Model (CAPM), overpriced securities have
A) positive betas.
B) zero alphas.
C) negative alphas.
D) positive alphas.

Question

Quizplus · Accepted Answer

According to the Capital Asset Pricing Model (CAPM), overpriced securities are characterized by negative alphas. Alpha represents the abnormal rate of return on a security, relative to the expected return predicted by CAPM. A negative alpha indicates that the security is performing worse than its expected return, suggesting it is overpriced.

According to the Capital Asset Pricing Model (CAPM), Overpriced Securities