According to the Capital Asset Pricing Model (CAPM), Which One

question 44

Multiple Choice

According to the Capital Asset Pricing Model (CAPM) , which one of the following statements is NOT true?

• A)The expected rate of return of a security decreases proportionally with a decrease in the risk-free rate.
• B)The expected rate of return of a security increases as its beta increases.
• C)A fairly priced security has an alpha of zero.
• D)In equilibrium, all securities lie on the security market line.

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Definitions:

Fourth Quintile

The fourth quintile refers to the subgroup that falls into the 60-80% range of a distribution when data is divided into five equal groups, often used in economic and social statistics to analyze income or wealth distribution.

Total Income

The total amount of money received by an individual or generated by an entity within a specific period, including wages, salaries, benefits, and other earnings.

Highest Percent

The maximum or largest percentage value within a given set or group of data.

Wage Rate

The amount of compensation an employee receives per unit of time or per task, typically expressed as an hourly rate or per piece rate.