If an Asset Has a Risk-Return Combination That Is Below

If an asset has a risk-return combination that is below the Security Market Line (SML) , then this indicates that the asset's:

A) Expected rate of return is lower than could be had from some combination of the risk-free asset and the market portfolio
B) Expected rate of return is higher than could be had from some combination of the risk-free asset and the market portfolio
C) Price will rise as arbitrage proceeds in the market
D) Risk will rise as arbitrage proceeds in the market

Correct Answer:

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