Finance theory suggests that
A) few securities will plot above the security market line.
B) few securities will plot above the capital market line.
C) no securities will plot above the efficient frontier.
D) all of the above.

Question

Quizplus · Accepted Answer

Finance theory posits that securities should not plot above the security market line or the capital market line, as these represent optimal risk-return trade-offs. Similarly, no securities should plot above the efficient frontier, which represents the set of optimal portfolios that offer the highest expected return for a defined level of risk or the lowest risk for a given level of expected return.

Finance Theory Suggests That