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The T-bill rate is 4 percent. The expected return on the market portfolio is 12 percent. XYZ's stock has 10 percent more systematic risk than
The T-bill rate is 4 percent. The expected return on the market portfolio is 12 percent. XYZ's stock has 10 percent more systematic risk than the market and has an actual return of 11 percent. This information allows us to conclude that:
a. will plot below the security market line.
b. is correctly priced.
c. is underpriced.
d. will plot on the security market line.
e. will plot to the left of the overall market on a security market line graph.
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