If the Simple CAPM Is Valid and All Portfolios Are

question 46

Multiple Choice

If the simple CAPM is valid and all portfolios are priced correctly, which of the situations below are possible?
Consider each situation independently and assume the risk-free rate is 5%.

• A)Option A
• B)Option B
• C)Option C
• D)Option D

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Definitions:

Korsakoff's Syndrome

A chronic memory disorder caused by severe deficiency of thiamine (vitamin B1), most often associated with prolonged alcoholism.

Confabulation

The creation of altered, false, or misrepresented recollections about one's own life or the world, without the deliberate aim to mislead.

Alzheimer's Disease

A degenerative brain disorder characterized by memory loss, cognitive decline, and personality changes.

Anterograde Amnesia

The loss of the ability to create new memories after the event that caused the amnesia.