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Which of the following is/are correct regarding the CAPM and SML? 1. A stock with a beta of 1 should have the same expected return

Which of the following is/are correct regarding the CAPM and SML? 1. A stock with a beta of 1 should have the same expected return as the market 2. The slope of the SML is the Treynor ratio. 3. If CAPM is valid and the market is efficient, all risky assets should fall on the SML.

a. 1 b. 2 c. 1 and 3 d. 2 and 3 e. All 3

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