Question

according to capm a security with:(which of the following option is correct)
1. An alpha of zero is able to generate a return which is greater to the market return.

2. a positive alpha is considered overpriced since the security outperforms the market.

3. An alpha of zero is able to generate a return which is inferior to the market return.

4. An positive alpha is considered under priced since the security outperforms the market. ​

Answer 1

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The correct answer is option (2) a positive alpha is considered overpriced since the security outperforms the market.

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