Both the APT and the CAPM Imply a Positive Relationship

question 22

Multiple Choice

Both the APT and the CAPM imply a positive relationship between expected return and risk.The APT views risk:

• A)very similarly to the CAPM via the beta of the security.
• B)in terms of individual intersecurity correlation versus the beta of the CAPM.
• C)via the industry wide or marketwide factors creating correlation between securities.
• D)the standardized deviation of the covariance.
• E)None of the above.

Understand the preparation and components of a cash budget.

Identify factors excluding cash payments in budgeting such as depreciation expense.

Understand the purpose and components of capital expenditure budgets.

Understand the components and importance of a cash budget.

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Definitions:

Price Ceiling

A legally established maximum price that can be charged for a good or service.

Deadweight Loss

The reduction in economic productivity that takes place when a good or service fails to achieve or cannot achieve its balance point.

Equilibrium Price

The rate at which the amount of products offered matches the amount of products consumers desire in the marketplace.

Demand Functions

Mathematical formulas representing the relationship between the quantity demanded of a good or service and its price, along with other factors like income and prices of related goods.