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Question 4b: Assume that markets are efficient so all assets are fairly priced. Expected future returns: Hint: CML stands for capital market line. SML stands
Question 4b: Assume that markets are efficient so all assets are fairly priced. Expected future returns: Hint: CML stands for capital market line. SML stands for security market line. Select one: O a. Above the SML are impossible since assets cannot be under- priced. b. On the SML are perfectly normal and to be expected. c. Above the CML are possible and mean that the asset has diversifiable risk. O d. On the CML are possible if the asset is a portfolio of the market portfolio and risk free rate. e. Below the CML are possible and mean that the asset has diversifiable risk
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