The Expected Return-Beta Relationship

question 48

Multiple Choice

The expected return-beta relationship

• A)is the most familiar expression of the CAPM to practitioners.
• B)refers to the way in which the covariance between the returns on a stock and returns on the market measures the contribution of the stock to the variance of the market portfolio, which is beta.
• C)assumes that investors hold well-diversified portfolios.
• D)All of the options are true.

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Definitions:

Voluntary

Actions or movements that are controlled by the individual's will, often referring to muscle movements.

Smooth Muscle

A type of muscle found in the walls of internal organs and blood vessels, responsible for involuntary movements within the body.

Not Striated

Describes muscle tissue that does not display a pattern of bands or stripes under a microscope, often referring to smooth muscle found in the walls of internal organs.

Neuroglia

Non-neuronal cells in the nervous system that provide support, protection, and nourishment to neurons, often referred to as glial cells.