Average excess return (96) 12 10 Portfolio ‘A" 3 0 Portfolio ‘3" O 6 K 4 POMOHO ‘0’ Market Portfolio 2 (Portfolio "D" 1 2 Beta Portfolio ”A": O is overpriced. O has a relatively lower expected return than predicted. 0 falls below the SML. © has a positive alpha.
Average excess
return (96)
12
10
Portfolio ‘A"
3 0 Portfolio ‘3"
O
6 K
4 POMOHO ‘0’ Market Portfolio
2
(Portfolio "D"
1 2 Beta
Portfolio ”A": O is overpriced.
O has a relatively lower expected return than predicted. 0 falls below the SML. © has a positive alpha.