Early Tests of the CAPM Involved

question 18

Multiple Choice

Early tests of the CAPM involved

• A)establishing sample data.
• B)estimating the security characteristic line.
• C)estimating the security market line.
• D)All of the options are correct.

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Definitions:

Net Present Value

A financial metric that calculates the value of a series of cash flows by discounting them back to the present day, used in capital budgeting to assess the profitability of an investment.

Compound Interest

Interest that is computed not only on the original amount deposited or borrowed but also on the interest that has been added to the principal over past periods.

Capital Investment

Funds invested in a firm or enterprise for the purpose of furthering its business objectives, such as purchasing long-term assets.

Estimated Life

The expected period over which an asset is useful to the owning entity and can generate revenue, used for calculating depreciation.