MRP Can Be Used to Best Advantage Under Which One

question 11

Multiple Choice

MRP can be used to best advantage under which one of the following circumstances?

• A) when the item's demand depends only on customer demand
• B) when the item's demand is uniform
• C) when the item's demand is constant
• D) when the item's demand depends on its parent's demand

---

Definitions:

CAPM

Capital Asset Pricing Model, a formula used to determine the expected return on an investment based on its risk relative to the market.

APT Model

Arbitrage Pricing Theory Model; a financial theory that estimates the returns on assets based on their exposure to various risk factors.

One Factor

In finance, refers to models or analyses that consider only a single variable or risk factor in their calculations.

CAPM

The Capital Asset Pricing Model, a model that describes the relationship between systematic risk and expected return for assets, particularly stocks.