Which of the following statements is false about models that attempt to measure the empirical performance of the CAPM? I) The conventional CAPM works better than the conditional CAPM with human capital.
II) The conventional CAPM works about the same as the conditional CAPM with human capital.
III) The conditional CAPM with human capital yields a better fit for empirical returns than the conventional CAPM.
A)I only
B)II only
C)III only
D)I and II

Question

Quizplus · Accepted Answer

The conventional CAPM and the conditional CAPM with human capital are different approaches to asset pricing. The conditional CAPM, which incorporates human capital and conditions on available information, generally provides a better fit for empirical returns than the conventional CAPM, which does not adjust for these factors. Therefore, statements I and II, which suggest the conventional CAPM is equal to or better than the conditional CAPM with human capital, are false.

Which of the Following Statements Is False About Models That