An asset with a negative Jensen's alpha will plot __________ the security market line.
A) above
B) below
C) on
D) on or below
E) on or above

Question

Quizplus · Accepted Answer

A negative Jensen's alpha indicates that the asset underperformed relative to its expected return based on its level of risk. Therefore, it will plot below the security market line, which denotes the relationship between expected return and risk for assets with positive alphas.

An Asset with a Negative Jensen's Alpha Will Plot __________