A Major Finding by Heaton and Lucas (2000) Is That

question 35

Multiple Choice

A major finding by Heaton and Lucas (2000) is that

• A) the market rate of return does not help explain the rate of return of individual securities, and CAPM must be rejected.
• B) the market rate of return does explain the rate of return of individual securities.
• C) the change in proprietary wealth helps explain the rate of return of individual securities.
• D) the market rate of return does not help explain the rate of return of individual securities, and CAPM must be rejected, but the change in proprietary wealth helps explain the rate of return of individual securities.
• E) None of the options are correct.

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Definitions:

Inventory Decrease

A reduction in the quantity of goods held in stock by a company.

Investing Activities

Transactions involving the purchase and sale of long-term assets or investments, part of a company’s cash flow.

Cash Payments

Financial transactions involving the outflow of cash to settle obligations or purchase goods and services.

Debt Principal

The original amount of money borrowed or the remaining balance of a loan, exclusive of interest.