Which One of the Following Is the Theory That States

question 5

Multiple Choice

Which one of the following is the theory that states that the value of a security is dependent upon the pure time value of money, the reward for bearing systematic risk, and the amount of systematic risk?

• A)reward-to-risk theory
• B)capital asset pricing model
• C)risk premium proposal
• D)market slope hypothesis
• E)security market line proposition

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Definitions:

Actuaries

Professionals skilled in assessing the financial impact of risk and uncertainty, utilizing mathematics, statistics, and financial theory to study uncertain future events, especially in the insurance and finance industries.

Unrecognized Net Loss

Refers to losses that have occurred but have not been reported in the financial statements.

Projected Benefit Obligation

An actuarial estimate of the total retirement benefits, under a pension plan, that an employee has earned to date, based on expected future salary levels.

Projected Benefit Obligation

The present value of expected future payouts for pension plan benefits.