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Consider the CAPM. If stock XYZ plots above the security market line, which of the following statements is true? Stock XYZ is underpriced and a

Consider the CAPM. If stock XYZ plots above the security market line, which of the following statements is true?

Stock XYZ is underpriced and a trader should buy it.

Stock XYZ is overpriced and a trader should buy it.

Stock XYZ is underpriced and a trader should short sell it.

Stock XYZ is overpriced and a trader should short sell it.

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