The CAPM Is Not Testable Unless

question 6

Multiple Choice

The CAPM is not testable unless

• A) the exact composition of the true market portfolio is known and used in the tests.
• B) all individual assets are included in the market proxy.
• C) the market proxy and the true market portfolio are highly negatively correlated.
• D) the exact composition of the true market portfolio is known and used in the tests, and all individual assets are included in the market proxy.
• E) all individual assets are included in the market proxy and the market proxy, and the true market portfolio are highly negatively correlated.

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Definitions:

Secularization Thesis

The theory that as societies progress, particularly through modernization and rationalization, religion loses its authority and influence over social life and governance.

Inequalities

The situation where different social statuses or positions within a society or group have unequal opportunities and advantages.

Social Solidarity

The bonds that unite members of a society, including shared values, beliefs, and behaviors that contribute to social cohesion and a sense of belonging.

Durkheimian Perspective

A sociological approach based on the work of Émile Durkheim, emphasizing the importance of social institutions and collective conscience in maintaining societal order.