Given Recent Evidence Concerning the CAPM,which of the Following Portfolios

question 38

Multiple Choice

Given recent evidence concerning the CAPM,which of the following portfolios might be expected to plot above the security market line?

• A) A portfolio of cyclical stocks
• B) A portfolio that includes borrowed funds
• C) A portfolio of smaller companies
• D) A portfolio split between Treasury bills and the market index

Understand the merger of law and equity and identify their differences.

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Definitions:

Returns To Scale

The change in output resulting from a proportional change in all inputs in the production process; can be increasing, constant, or decreasing.

Increasing Returns To Scale

See Economies of scale.

Economies Of Scale

Exist when average costs fall as output increases.

Diseconomies Of Scale

Exist when average costs rise with output.