Which of the Following Is an Assumption of the Capital

question 12

Multiple Choice

Which of the following is an assumption of the Capital Asset Pricing Model?

• A) Very few investors hold fully diversified portfolios.
• B) The relationship between beta and expected returns are seldom linear.
• C) Returns on specific shares are affected by general market changes only.
• D) Beta values tend to be unstable over the long term.
• E) Historical data can be used to predict the future.

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Definitions:

Immediate Sensory Grasp

The immediate understanding or perception of something through direct experience via the senses, without the need for conceptualization.

Hidden Objects

Items that are not easily visible or are concealed from view, often used in contexts requiring observation and discovery skills.

Mirror Neurons

Neurons that fire both when an individual performs an action and when they observe the same action performed by another, thought to be involved in empathy and learning by imitation.

Dopamine

A neurotransmitter in the brain that plays a significant role in reward, motivation, memory, and motor control.