The Capital Asset Pricing Theory Is Based on the Premise

question 46

Multiple Choice

The capital asset pricing theory is based on the premise that:​

• A) ​only unsystematic variability in cash flows is relevant.
• B) ​only systematic variability in cash flows is relevant.
• C) ​both systematic and unsystematic variability in cash flows are relevant.
• D) ​neither systematic nor unsystematic variability in cash flows is relevant.

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Definitions:

Determination

The firmness of purpose or the process of establishing something exactly by calculation or research.

Goodness Of Fit

A statistical analysis to determine how well sample data fit a distribution from a population with a normal distribution.

Regression Equation

The equation that describes how the mean or expected value of the dependent variable is related to the independent variable; in simple linear regression, E(y) = b0 + b1x.

Estimated Income

The projection or approximation of income over a specified future period, often based on historical data and current trends.