Question

If a stock were overpriced, it would plot A) above the security market line. B) below the security market line. C) on the security market line. D) on the y-axis.

Answer 1

A) above the security market line.

Step-by-step explanation:

A) above the security market line.

Option "a" is correct because all the correct priced stock will be shown on the security market line while the underprice stock is represented above the security market line and the overpriced stock is shown below the security market line.