Which of the Following Is not a Relaxation of the Assumptions

question 23

Multiple Choice

Which of the following is not a relaxation of the assumptions for the CAPM?

• A) Differential lending and borrowing rates
• B) A zero beta model
• C) Transaction costs
• D) Taxes
• E) Homogeneous expectations and fixed planning periods

---

Definitions:

Signal-detection Theory

A means to quantify the ability to discern between information-bearing patterns and random patterns that distract from the information.

Correct Rejection

In signal detection theory, the accurate identification that a signal is not present.

False Alarm

An erroneous alert or notification indicating the presence of a threat or condition that in reality does not exist.

Miss

To fail to hit, reach, catch, or otherwise make contact with something; also used to express a feeling of loss or absence.