Question: Use the following three statements to answer this question According to the CAPM, an underpriced security has a negative alpha The expected rate of return

Use the following three statements to answer this question

  1. According to the CAPM, an underpriced security has a negative alpha
  2. The expected rate of return of a security decrease proportionally with a decrease in the risk free asset
  3. Is bA=2bB, the required rate of return for stock A= 2 x required rate of return of stock B

  1. 1 and 2
  2. 1 and 3
  3. All are incorrect
  4. All are in correct
  5. 1 only

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