Part 0. (Sentence Correction) All of the following statements are false. Please change the incorrect parts to make them true. DO NOT negate the…

Part 0. (Sentence Correction) All of the following statements are false. Please change the incorrect parts to make them true. DO NOT negate the sentence, unless necessary

14. The market portfolio has a beta of zero. 15. According to the CAPM, a security with a negative alpha is underpriced.

16. According to the CAPM, investors require a risk premium as compensation for bearing unsystematic risk.

17. According to the CAPM, a fairly-priced security will plot on the capital market line.

18. According to the CAPM, all securities’ returns must lie on the capital market line in equilibrium.

19. According to the CAPM, the slope of the security market line must be less than the market risk premium.

20. According to the CAPM, the risk premium an investor expects to receive on any stock or portfolio is directly related to the alpha of the stock.

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