Which of the Following Statements Regarding Errors in the CAPM

question 19

Multiple Choice

Which of the following statements regarding errors in the CAPM inputs is (are) true?

• A)Errors in equity premium estimates tend to be large and have a significant influence on the resultant hurdle rates.
• B)Errors in the risk-free rate tend to be insignificant.
• C)Errors in market-beta estimates tend to be modest.
• D)All of the above statements are true.

---

Definitions:

Acid Deposition

The deposition of acidic components in rain, snow, or dry particles on the earth's surface, often originating from the emissions of sulfur dioxide and nitrogen oxides.

Toxic Metals

Refers to metallic elements that have high densities, atomic weights, or atomic numbers and are toxic to organisms at low concentrations.

Fish

Aquatic animals with gills, often scaled, that live in water, ranging from tiny minnows to large sharks, important for food, recreation, and ecosystem health.

Particulates

Small particles suspended in air or water, which can originate from natural sources or human activities and impact air quality and human health.