Both the CAPM and APT Suggest That an Asset Should

question 38

Multiple Choice

Both the CAPM and APT suggest that an asset should be priced so that it has a higher expected return

• A)when it has a greater systematic risk.
• B)when it has a greater risk in isolation.
• C)when it has a lower systematic risk.
• D)when it has a lower systematic risk and a lower risk in isolation.

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Definitions:

Fertile Offspring

Offspring that are capable of reproducing, indicating successful genetic combination and viability.

Species

A fundamental category in biological taxonomy, defined as a group of organisms capable of interbreeding and producing fertile offspring.

Evolution

The method through which various types of living beings are believed to have evolved and varied from their early ancestors over the Earth's history.

Biological Sciences

A branch of science concerned with the study of life and living organisms.