Which of the Following Is an Implication of the CAPM

question 70

Multiple Choice

Which of the following is an implication of the CAPM?

• A) A security with a beta of 0 has an expected return of 0.
• B) Investors are not compensated for bearing diversifiable risk.
• C) The risk-return relationship is nonlinear.
• D) There are two risk factors that drive asset returns.

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Definitions:

Discrepancies

Differences or inconsistencies between compared elements, such as data points, perspectives, or actions.

Patterns

Recurring characteristics or events that can be identified through analysis and observation.

Conflicts

Disagreements, competitions, or disputes between parties who perceive incompatible goals or interference in achieving their objectives.

Openness

A personality trait or quality of being willing to consider new ideas, experiences, and diverse perspectives, often associated with creativity and adaptability.