The CAPM

question 40

Multiple Choice

The CAPM:

• A) uses the risk free rate of return and the efficient market portfolio to estimate risk.
• B) considers the sensitivity of a stock to different risk factors to calculate risk.
• C) uses the expected return on a given security to determine its overall risk.
• D) measures the amount of unsystemic risk to determine the expected return of a stock
• E) All of these answers are correct

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Definitions:

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A mutual understanding or interpretation of a term or concept established through communication or negotiation.

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