Refer to the graph. If a ﬁnancial asset's average expected rate of return and beta put it at point F,
A) arbitrage will push down the price of the asset and lower the average expected rate of return to Y.
B) arbitrage will push up the price of the asset and lower the average expected rate of return to Y.
C) a restrictive monetary policy is needed to move the asset onto the Security Market Line.
D) an expansionary monetary policy is needed to move the asset onto the Security Market Line.

Question

Refer to the graph. If a ﬁnancial asset's average expected rate of return and beta put it at point F,
A) arbitrage will push down the price of the asset and lower the average expected rate of return to Y. 
B) arbitrage will push up the price of the asset and lower the average expected rate of return to Y. 
C) a restrictive monetary policy is needed to move the asset onto the Security Market Line. 
D) an expansionary monetary policy is needed to move the asset onto the Security Market Line.

Quizplus · Accepted Answer

The Answer of  Refer to the graph. If a ﬁnancial asset's average expected rate of return and beta put it at point F,
A) arbitrage will push down the price of the asset and lower the average expected rate of return to Y. 
B) arbitrage will push up the price of the asset and lower the average expected rate of return to Y. 
C) a restrictive monetary policy is needed to move the asset onto the Security Market Line. 
D) an expansionary monetary policy is needed to move the asset onto the Security Market Line.

Refer to the Graph