Which statement is correct?
A)An underpriced security will plot below the security market line.
B)A security with a beta of 1.54 will plot on the security market line if it is correctly priced.
C)A portfolio with a beta of .93 will plot to the right of the overall market.
D)A security with a beta of .99 will plot above the security market line if it is correctly priced.
E)A risk-free security will plot at the origin.

Question

Quizplus · Accepted Answer

A security with a beta of 1.54 will plot on the security market line if it is correctly priced, as the security market line represents the expected return of a security based on its beta.

Which Statement Is Correct