You are comparing three assets which have differing Treynor ratios. Given this, which one of the following must be true?
A) The assets may all be correctly priced if they have differing betas.
B) The assets have differing rates of return.
C) The assets have differing levels of market risk but equal amounts of total risk.
D) The assets are all mispriced according to CAPM.
E) The preferred investment is the asset with the highest Treynor ratio.
Correct Answer:
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