21

Assume CAPM is a correct model, which of the following statement is correct? O a. The beta of an overpriced stock should be greater than 1 The beta of a fairly priced stock should equal to 1 O b. O c. The expected return of a fairly priced stock should lie above the SML O d. The expected return of an over-priced stock should lie below the SML Oe. The beta of an overpriced stock should be less than 1