Which of the Following Are Assumptions of the Capital Asset

question 4

Multiple Choice

Which of the following are assumptions of the capital asset pricing model?

• A)Funds can be borrowed or lent in unlimited quantities at risk-free rate
• B)The objective of all investors is to maximize their expected utility over the same one-period time frame using the same basis for evaluating investments
• C)There are no taxes or transaction costs associated with any investment
• D)All of the above are correct assumptions

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Definitions:

Costs

The total amount of money required for the production of goods or services, including materials, labor, and overhead expenses.

Prime Costs

The direct costs of manufacturing, including direct labor and materials.

Direct Labour

The work done by employees directly involved in producing a product or delivering a service, often considered a variable cost.

Direct Materials

Direct materials are the raw materials that are directly traceable and allocable to a finished product in the manufacturing process, directly impacting the cost of goods sold.