EXPLANATIONS NEEDED (CORRECT ANSWERS WILL BE PROVIDED, BUT WHY ARE THESE THE ANSWERS):

Question 13: Select the most appropriate match (correct answers below)

i. Securities with returns that lie above the security market line are undervalued

ii. Securities with returns that lie below the security market line are overvalued

iii. An overvalued investment is so expensive that we will not receive a fair return if we bought it

iv. An undervalued investment is so expensive that we will not receive a fair return if we bought it

v. Those who employ the bottom-up approach start their search immediately at the company level

vi. Those who employ the top-down approach end their search immediately at the company level

vii. In a multifactor model, confidence risk represents unanticipated changes in the willingness of investors to take on investment risk

viii. In a multifactor model, time horizon risk represents unanticipated changes in investors' desired time to receive payouts

ix. The capital market line is the tangent line between the risk-free rate of return and the efficient frontier

x. Given a portfolio of stocks, the envelope curve containing the set of best possible combinations is known as the efficient frontier

xi. The optimal portfolio is identified at the point of tangency between the efficient frontier and the highest possible utility curve