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1. Securities above the SML are said to be underpriced or overpriced. Which is it? 2. True or False: The Market Risk Premium (MRP) will

1. Securities above the SML are said to be underpriced or overpriced. Which is it?

2. True or False: The Market Risk Premium (MRP) will change with economic expectations.

3. If the Fed proactively raises rates in order to preempt inflation, the risk-free rate will rise / fall. Which is it?

4. True or False: In calculating Beta, we ignore correlation.

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