QUESTION 4 5 points The risk-free rate is 4 percent. The expected market rate of return is 11 percent. If you expect CAT with a beta of 0.8 to offer a rate of return of 10 percent, you should A. buy CAT because it is underpriced. OB. sell short CAT because it is overpriced. buy CAT because it is overpriced. O D. hold CAT because it is fairly priced. O E. sell sick short CAT because it is underpriced. QUESTION 5 5 points sau In the CAPM world, two securities, A and B, are priced efficiently, i.e., they fall on the SML. The expected return of A is 20%, and its beta is 1.6. The expected return of Bis 11%, and its beta is 0.7. What is the slope of the SML? A. 0.15 B.0.2 OC. 0.1 OD.0.12 E. 0.08 QUESTION 6 5 points Given an optimal risky portfolio with expected return of 20% and standard deviation of 30% and a risk free rate of 8%, what is the slope of the best feasible CAL? A.0.45 B. 0.33 C. 0.40 OD.0.36 E. 0.14