What would you recommend to an investor who is considering an investment that,according to its beta,plots below the security market line (SML) ?
A) Invest; return is high relative to risk.
B) Don't invest; risk is high relative to return.
C) Invest; stocks revert to the SML over time.
D) Don't invest; stocks below the SML have too much unique risk.
Correct Answer:
Verified
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