1) According to the CAPM, the expected return on a security is not affected by the:

A) market rate of return.

B) security's beta.

C) risk-free rate.

D) security's unique risks.

E) security's risk premium.

2) The higher the standard deviation of return, the higher the _______________ risk.

A) market

B) unique

C) total

D) firm-specific

3) If a security plots to the right and below the security market line, then the security is ________.

A) overpriced

B) correctly priced

C) underpriced