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What is correct? expected return a. Asset A is overvalued and asset B is undervalued. b. The demand for asset A decreases and the demand
What is correct?
expected return
a. Asset A is overvalued and asset B is undervalued. b. The demand for asset A decreases and the demand for asset B increases. c. The expected return on asset A increases and the expected return on asset B decreases. d. If you short-sell asset A and invest in asset B, you can make an excess profit. Arbitrage trading is terminated on the stock market line to achieve equilibrium. e. The beta coefficient of asset A must be less than 1.
SML M B It BA BM=1 BBStep by Step Solution
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