The Capital Asset Pricing Model (CAPM)is Based on the Premise

question 78

True/False

The capital asset pricing model (CAPM)is based on the premise that the only important risk of a firm is unsystematic risk.

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Definitions:

Market Capitalization Rate

Market capitalization rate refers to the expected rate of return on a portfolio or an investment given its risk level, often used in the valuation of stocks.

Return-On-Equity Ratio

A financial ratio that measures a company's ability to generate profits from its shareholders' equity.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, resulting in a profit or loss.

Balance Sheet

A financial statement that displays a company's assets, liabilities, and shareholder's equity at a specific point in time.