A Common Criticism of the CAPM Is That It

question 50

Multiple Choice

A common criticism of the CAPM is that it

• A)ignores the return on the market portfolio.
• B)uses too many factors.
• C)requires only a single measure of systematic risk.
• D)ignores the risk-free rate of return.

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Definitions:

Gas Stations

Businesses that sell fuel for automobiles, motorcycles, and other vehicles, often offering additional services like convenience store products.

Tax Increase

The raising of taxes by a government, which can affect individuals, businesses, and the economy by influencing spending, saving, and investment behaviors.

Social Security Tax

Taxes collected to fund the Social Security program, which provides benefits to retirees, disabled individuals, and survivors of deceased workers.

Regressive

Describes a process or policy that disproportionately affects those with lower incomes or status, often applied to taxation.