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Question:

In the context of the capital asset pricing model, an active manager would be most likely to purchase a security that plots:

A above the security market line.
explanation

Active management seeks to identify mispriced assets, which are likely to earn abnormal returns. A security that plots above the security market line (SML) is undervalued (i.e., expected to earn a return that is higher than it would if it were priced at its equilibrium price, given its systematic risk).

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