One Key Conclusion of the Capital Asset Pricing Model Is

question 65

True/False

One key conclusion of the Capital Asset Pricing Model is that the value of an asset should be measured by considering both the risk and the expected return of the asset, assuming that the asset is held in a well-diversified portfolio.The risk of the asset held in isolation is not relevant under the CAPM.

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Definitions:

Information Users

Individuals or entities that use financial information to make decisions, including investors, creditors, and management.

Financial Statement

A written report that quantitatively describes the financial health of a company, including the balance sheet, income statement, and cash flow statement.

First Statement

Broadly refers to the initial financial statement or report produced for a specific period; contextually could vary (e.g., income statement, balance sheet).

Internal Users

Individuals within an organization who use the company's financial information for decision-making, including management and employees.