The capital asset pricing model (CAPM) states which of the following?
A) The expected risk premium on an investment is proportional to its beta.
B) The expected rate of return on an investment is proportional to its beta.
C) The expected rate of return on an investment is determined entirely by the risk-free rate and the market rate of return.
D) The expected rate of return on an investment is determined entirely by the risk-free rate.
Correct Answer:
Verified
Q29: One would expect a stock with a
Q30: The presence of a risk-free asset enables
Q31: Suppose the beta of Amazon is 2.2,
Q32: The Sharpe ratio is defined as
A)(rP −
Q33: The beta of the market portfolio is
A)0.0.
B)+0.5.
C)−1.0.
D)+1.0.
Q35: One would expect a stock with a
Q36: Suppose the beta of ExxonMobil is 0.65,
Q37: Suppose the beta of Microsoft is 1.13,
Q38: The graphical representation of the CAPM (capital
Q39: A common criticism of the CAPM is
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