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:

Cerebral Cortex

The outer layer of the brain's cerebrum, responsible for complex functions such as thought, perception, and memory.

Limbic System

A complex system of nerves and networks in the brain, involved in emotions and drives.

Brain Functioning

Refers to how different parts of the brain operate and work together to support thoughts, behaviors, and bodily functions.

Meta-Analysis

A statistical analysis of results collected from multiple scientific studies.