Given the CAPM's Noted Empirical Difficulties,which of the Following Statements

question 31

Multiple Choice

Given the CAPM's noted empirical difficulties,which of the following statements may be correct concerning a low price-earnings ratio stock?

• A) The stock has too much systematic risk.
• B) The stock plots above the security market line.
• C) The stock plots below the security market line.
• D) The stock has a zero beta.

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Definitions:

Creative Appraisal

The evaluation process of assessing an individual's originality, innovation, and ability to generate novel ideas or solutions.

Productivity

The ratio of an organization’s inputs, or its resources, to its outputs, or the goods and services it produces.

Encouragement

The action of giving support, confidence, or hope to someone, often leading to improved performance or morale.

Motivation

The force of the need or desire to act.