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.

Comprehend the differences between operating leases and capital leases and their accounting treatment.

Recognize bond-related terminology and the significance of bond indenture documents.

Understand how bond premiums and discounts affect the selling price and interest expense.

Know how different financing plans affect a corporation's net income and earnings per share.

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Definitions:

Research and Development

Activities undertaken by a business or organization to innovate and introduce new products or services, or to improve their existing offerings.

Stockholders' Equity

Represents the residual interest in the assets of a corporation after deducting liabilities, effectively the net worth attributable to shareholders.

Common Stock

Equity securities that represent ownership in a company, entitling holders to vote on corporate matters and receive dividends.