The ____ Is Not a Factor Used in the Capital

question 85

Multiple Choice

The ____ is not a factor used in the capital asset pricing model (CAPM) to derive the return of an asset.

• A) prevailing risk-free rate
• B) dividend growth rate
• C) market return
• D) covariance between the asset's returns and market returns
• E) All of the above are factors used in the CAPM.

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Definitions:

Contra-Asset Account

A contra-asset account is an account used in a ledger to reduce the value of a related account. It has a credit balance and is used to adjust the value of an asset account to its net value.

Consignment-In

A transaction arrangement where goods are placed in the care of another party to sell, but ownership and title remain with the supplier until sale.

Credit Balance

A situation where the total credits in an account exceed the total debits, often reflecting a company's liability or revenue.

Notes Receivable

Claims or promissory notes that entitle the holder to receive payments from debtors, typically in the future, and recorded as assets on the balance sheet.