In the 1972 Empirical Study by Black, Jensen, and Scholes

question 35

Multiple Choice

In the 1972 empirical study by Black, Jensen, and Scholes, they found that the estimated slope of the security market line was _______ what the CAPM would predict.

• A)higher than
• B)equal to
• C)less than
• D)twice as much as

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Definitions:

Absolute Advantage

The ability of a country or individual to produce a good or service more efficiently than other countries or individuals, using fewer resources.

Production Possibilities Frontiers

A curve depicting the maximum output combinations of two goods that can be produced given the resources and technology.

Opportunity Cost

The value of the best alternative that must be forgone when making a choice.

Chocolate Truffle

A type of chocolate confectionery, traditionally made with a chocolate ganache center coated in chocolate, cocoa powder, or chopped toasted nuts.