According to the Capital Asset Pricing Model (CAPM),which One of the Following

question 18

Multiple Choice

According to the Capital Asset Pricing Model (CAPM) ,which one of the following statements is

• A) The expected rate of return on a security decreases in direct proportion to a decrease in the risk-free rate.
• B) The expected rate of return on a security increases as its beta increases.
• C) A fairly priced security has an alpha of zero.
• D) In equilibrium,all securities lie on the security market line.
• E) All of these statements are true.

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Definitions:

Prior Period Adjustment

Corrections of errors in previously published financial statements not related to the current period.

Income Statement

A report detailing a company’s financial activities, including income and expenditures, over a designated accounting timeframe.

Computer Equipment

Hardware and devices, including computers, servers, and peripherals, necessary for the operations and management of digital tasks.

Price-earnings Ratio

A valuation ratio of a company's current share price compared to its per-share earnings, indicating market expectations.