If MP_K = 3, and MRTS = -4, What Is

question 120

Multiple Choice

If MP_K = 3, and MRTS = -4, what is MP_L?

• A)12
• B)-12
• C)4/3
• D)-4/3

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Definitions:

Average Excess Returns

The average return on an investment above the benchmark or risk-free rate.

Rational Security Pricing

The concept that the market prices of securities reflect all available information and are valued accordingly in an efficient way.

Constant-growth Dividend-discount Model

A method for valuing a stock by assuming that dividends grow at a constant rate indefinitely, used to estimate the stock's price based on future dividend payments.

Multifactor CAPM

Generalization of the basic CAPM that accounts for extra-market hedging demands.