The market portfolio is the tangency point between the capital market line and the indifference curve.

True

False

The risk-free rate is 3.5%. The expected market rate of return is 12.5%. If you expect CAT with a beta of 0.9 to offer a rate of return of 12.2%, you should

	A.	None of the options, as CAT is fairly priced.
	B.	buy CAT because it is underpriced.
	C.	buy CAT because it is overpriced.
	D.	sell short CAT because it is overpriced.