According to the capital asset pricing model, a fairly priced security will plot ________.
A) above the security market line
B) along the security market line
C) below the security market line
D) at no relation to the security market line

Question

Quizplus · Accepted Answer

The capital asset pricing model states that a fairly priced security will plot along the security market line, which represents the expected return of a security based on its level of risk. Securities that plot above the security market line are deemed undervalued, while those that plot below the line are considered overvalued. A security that has no relation to the security market line would be considered an anomaly in the model.

According to the Capital Asset Pricing Model, a Fairly Priced