The Basic Tenet of the CAPM Is That a Stock's

question 58

Multiple Choice

The basic tenet of the CAPM is that a stock's expected risk premium should be:

• A) greater than the expected market return.
• B) proportionate to the market return.
• C) proportionate to the stock's beta.
• D) greater than the risk-free rate of return.

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Definitions:

Levels of Processing

A theory in cognitive psychology that suggests information can be processed at different depths, from shallow to deep, with the level of processing affecting memory retention.

Deeper Processing

Refers to the cognitive mechanism where information is processed at a more detailed and comprehensive level, enhancing memory and understanding.

Recite

To repeat aloud from memory before an audience.

Retrieval

The act of retrieving and making conscious the data stored in one's memory.