Question: Please help me with the question below: Under the assumption of the CAPM, if an asset plots above the SML (i.e., its actual expected return
Please help me with the question below:
Under the assumption of the CAPM, if an asset plots above the SML (i.e., its actual expected return expects the equilibrium expected return)
A. a single investor will sell a large number of shares short and generate an arbitrage profit.
B. a single investor will buy a large number of shares and generate an arbitrage profit.
C. all investors will incrementally increase their position in the asset.
D. all investors will incrementally decrease their position in the asset.
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