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Question 10 2 pts Consider the following graph of the security market line: Average excess return (%) 12 10 Portfolio A 8 Portfolio B 4

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Question 10 2 pts Consider the following graph of the security market line: Average excess return (%) 12 10 Portfolio "A" 8 Portfolio "B" 4 Portfolio "C Market Portfolio 2 Portfolio "D" 2 Beta If the CAPM assumptions hold, which of the following statements regarding portfolio "B" is/are correct? 1. Portfolio "B" has a positive alpha. 2. Portfolio "B" is overpriced. 3. Portfolio "B" is less risky than the market portfolio. 4. Portfolio "B" should not exist if the market portfolio is efficient. . 2,4 2,3,4 2,3 0 3,4 None of these alternatives

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