If a firm's expected return is found to be below the Security Market Line, the firm is...

Question 12 options:

	undervalued. A good trading strategy would be to sell the firm.
	overvalued. A good trading strategy would be to buy the firm.
	overvalued. A good trading strategy would be to sell the firm.
	undervalued. A good trading strategy would be to buy the firm.

When does combining two assets result in a diversification benefit?

Question 11 options:

	Whenever the correlation between two assets is less than 1
	Only when the covariance between the two assets is negative.
	Only when the correlation between two assets is between -1 and 0
	Only when the covariance between two assets is zero

Question 10 (1 point)

According to the CAPM, the expected return of an asset depends on...

Question 10 options:

	The risk-free rate, the market risk premium, the covariance of the asset with the market, and the idiosyncratic component of return
	The risk-free rate, the market risk premium, and the covariance of the asset with the market
	The risk-free rate, and the market risk premium
	The risk-free rate