18) In CAPM, a security that is fairly priced will have a return that lies _____ the security market line (the SML)

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18) In CAPM, a security that is fairly priced will have a return that lies _____ the security market line (the SML). 

a) above

b) below

c) on

d) on or below

e) on or above

19- In CAPM, a stock with an actual return for its unique level of risk that plots above the security market line (the SML) has:

a) has more risk from inflation than the average stock or the overall market.

b) generates a higher return than expected for its unique risk level.

c) less risk than the overall market.

d) provides a return that is appropriate for its unique risk level.

e) has more risk than the overall market.

20 - A stock with a beta of zero would be expected to have a rate of return equal to: 

a) the risk-free rate.

b) zero.

c) the prime rate.

d) the market rate.

e) the average AAA bond.

21 - Amy and Andy have a portfolio with a beta of 1.26 and want to reduce the risk of the portfolio. Adding which of the following securities is likely to lower the risk of the portfolio?  

a)a stock with a beta of 2.5

b) U.S. Treasury bills

c) A mix of small-company and large-company stocks

d) A stock with a beta of 2.25

e) A stock that has a standard deviation of 11 percent