An asset that plots below the security market line:
A) is inefficient.
B) is underpriced.
C) has a return that is too high for its level of total risk.
D) is overpriced.
E) has a return that is too low for its level of systematic risk.

Question

Quizplus · Accepted Answer

An asset that plots below the security market line is considered overpriced because it offers a lower return for its level of systematic risk compared to what is expected by the market.

An Asset That Plots Below the Security Market Line