According to the Capital Asset Pricing Model (CAPM), Which One

question 58

Multiple Choice

According to the Capital Asset Pricing Model (CAPM) , which one of the following statements is false?

• A)The expected rate of return on a security increases in direct proportion to a decrease in the risk-free rate.
• B)The expected rate of return on a security increases as its beta increases.
• C)A fairly priced security has an alpha of zero.
• D)In equilibrium, all securities lie on the security market line.

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Definitions:

Conservation

In cognitive psychology, the principle that properties of substances, such as weight and mass, remain the same (are conserved) when superficial characteristics such as their shapes or arrangement are changed.

Empathy

The capacity to understand and share the feelings of another person, fostering emotional connection and social bonding.

Fine Motor Skills

The coordination of small muscles, in movements—usually involving the synchronization of hands and fingers—with the eyes.

Preoperational Thought

A stage in Jean Piaget's theory of cognitive development where children aged 2-7 years begin to engage in symbolic play and struggle with logic and taking the perspective of others.