Both the CAPM and APT Suggest That an Asset Should

question 38

Multiple Choice

Both the CAPM and APT suggest that an asset should be priced so that it has a higher expected return

• A)when it has a greater systematic risk.
• B)when it has a greater risk in isolation.
• C)when it has a lower systematic risk.
• D)when it has a lower systematic risk and a lower risk in isolation.

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Definitions:

Oxygen-Hemoglobin Dissociation

The process by which oxygen molecules detach from hemoglobin within red blood cells, allowing oxygen to be released to tissues.

Pulmonary Veins

Blood vessels that transport oxygenated blood from the lungs to the left atrium of the heart.

Pulmonary Artery

One of the arteries that extend from the pulmonary trunk to the right or left lungs.

Respiratory Membrane

The structure in the lungs where gas exchange between the air and blood takes place, consisting of alveolar and capillary walls.