1. An undervalued stock has an expected return that is too ______ and a reward-to-risk ratio that is too _______.

Select one:

a. high; high

b. high; low

c. low; high

d. low; low

e. volatile; high

2. You have collected 10 years worth of data on annual returns on Microsofts common shares and the S&P 500 Composite Index. You then plotted the data on an X-Y graph, with the Microsoft returns on the y-axis and the index returns on the x-axis. The trend line drawn on this plot of returns is called the _________________ line.

Select one:

a. security market

b. reward-to-risk ratio

c. systematic risk

d. return term structure

e. characteristic