Given the following graph, which of the following statement is correct? CML M E(RM) E(R) ft...

 

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Given the following graph, which of the following statement is correct? CML M E(RM) E(R) ft B D E(R) E(R) A A M M A M SML Securities A, B, C and D should all sell for the same price because they all have the same std. deviations. Security A should be the best choice in a well diversified portfolio because it has the lowest std. deviation. Security A is the only one that can be diversified and thus the only that shows up on the SML graph. Security A has the lowest return for the same risk as B, C and D so investors should not buy A, but rather D. In a well-diversified portfolio, securities A, B, C and D should all have the same return. Given the following graph, which of the following statement is correct? CML M E(RM) E(R) ft B D E(R) E(R) A A M M A M SML Securities A, B, C and D should all sell for the same price because they all have the same std. deviations. Security A should be the best choice in a well diversified portfolio because it has the lowest std. deviation. Security A is the only one that can be diversified and thus the only that shows up on the SML graph. Security A has the lowest return for the same risk as B, C and D so investors should not buy A, but rather D. In a well-diversified portfolio, securities A, B, C and D should all have the same return.

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The question asks which of the following statements is correct Securities A B C and D should all sel... View the full answer