Which of the Following Statements Is FALSE

question 87

Multiple Choice

Which of the following statements is FALSE?

• A)The imperfections in the CAPM may be critical in the context of capital budgeting and corporate finance,where errors in estimating the cost of capital are likely to be far more important than small discrepancies in the project cash flows.
• B)To estimate the expected market risk premium,we can look at the historical average excess return of the market over the risk-free interest rate.
• C)The highest beta stocks have tended to underperform what the CAPM predicts.
• D)Given an assessment of an index's future cash flows,we can estimate the expected return of the market by solving for the discount rate that is consistent with the current level of the index.

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Definitions:

Controlling

In management, the process of monitoring performance and making adjustments to achieve desired outcomes.

Desired Results

The specific outcomes or objectives that an individual, group, or organization aims to achieve, serving as targets for planning and performance evaluation.

Formal Training And Education

Structured programs designed to develop skills and knowledge necessary for specific jobs or careers through classes, workshops, and practical exercises.

Honeywell

A multinational conglomerate company that produces a variety of commercial and consumer products, engineering services, and aerospace systems.