Which of the following statements is/are true?
A)Both APT and CAPM argue that expected excess return must be proportional to the beta(s).
B)APT and CAPM are the only approaches to measure expected returns in risky assets.
C)Both CAPM and APT are risk-based models.
D)Both A and B.
E)Both A and C.

Question

Quizplus · Accepted Answer

A) Both APT and CAPM argue that expected excess return must be proportional to the beta(s).
This statement is true as both APT and CAPM consider the relationship between expected return and risk as represented by beta.

C) Both CAPM and APT are risk-based models.
This statement is also true as both models consider the impact of risk on expected returns.

B) APT and CAPM are the only approaches to measure expected returns in risky assets.
This statement is false. While APT and CAPM are popular approaches to measuring expected returns in risky assets, there are other models and approaches available such as the Fama-French Three-Factor Model and the Dividend Discount Model.

Which of the Following Statements Is/are True