One Criticism in Using the CAPM to Calculate the Cost

question 45

Short Answer

One criticism in using the CAPM to calculate the cost of equity capital is that ______________________________ and the __________________________________________________ are quite sensitive to the time period and methodology used in their computation.

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Definitions:

World View

A person's or group's belief system or perspective that shapes their interpretation and understanding of the world around them.

Social Norms

Shared beliefs about acceptable and expected behavior within a group or society.

Teleology

The philosophical study of design and purpose in the natural world, or the explanation of phenomena by the purpose they serve rather than by postulated causes.

World View

The fundamental cognitive orientation of an individual or society encompassing the whole of the individual's or society's knowledge and point of view.