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Which One of These Statements Is Correct Concerning the CAPM

Question 2

Multiple Choice

Which one of these statements is correct concerning the CAPM?


A) The CAPM is the only available method for determining an appropriate discount rate for a proposed project.
B) The market rate of return is most commonly based on the forecasted return on the market for the next 5-year period.
C) CAPM is used quite frequently by firms in their capital budgeting process.
D) The expected return on the 30-year U.S.Treasury bond is the most commonly used as the risk-free rate of return.
E) An increase in the risk-free rate combined with a beta greater than 1.0 increases the discount rate computed using the CAPM.

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