In a highly competitive market, all stocks should:
A) Produce the same rate of return.
B) Plot on the same security market line.
C) Have the same beta.
D) Have the same standard deviation.
E) Plot at the intercept point.

Question

Quizplus · Accepted Answer

In a highly competitive market, all stocks should plot on the same security market line according to the Capital Asset Pricing Model (CAPM). This line represents a market equilibrium where each security's expected return is proportional to its risk (beta).

In a Highly Competitive Market, All Stocks Should