The Capital Asset Pricing Model

question 69

Multiple Choice

The capital asset pricing model:

• A) expresses a linear relationship between returns on individual stocks and the market over time.
• B) can be used to examine common stock returns but not the risk of the stock.
• C) is not very useful because it is unrealistically a linear model.
• D) is a linear model used to evaluate risk free rate.

---

Definitions:

Secured Party

An individual or entity that holds an interest in a secured transaction, typically holding collateral against a loan or obligation.

Collateral

An asset or property that a borrower offers to a lender as security for a loan, which can be forfeited in the event of a default.

Security Agreement

A legal contract that grants a lender a security interest in specified assets or property owned by the borrower as collateral for a loan.

Encryption

The process of converting information or data into a code to prevent unauthorized access.