CFA Practice Question

CFA Practice Question

Which of the following is incorrect?
A. An 'overvalued' asset will lie under the SML.
B. If CAPM is true, in the presence of a riskless asset the portfolios held by investors lie on a straight line.
C. An 'undervalued' asset will have an expected return that is less than that implied by riskiness.
Explanation: Undervalued asset has lower than 'right' price, hence has higher than 'right' return.

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