Validity of the CAPM Depends on

question 54

Multiple Choice

Validity of the CAPM depends on

• A) accurate estimation of ex ante returns
• B) the existence of a risk-free asset
• C) good measurement of risk
• D) mean-variance efficiency of the market portfolio
• E) all of the above

---

Definitions:

Opponent-Process Reaction

A theory suggesting that emotions are regulated by mechanisms that operate in opposing pairs; for example, an increase in happiness leads to a decrease in sadness.

General Adaptation Syndrome

describes the three-stage process (alarm, resistance, exhaustion) that the body undergoes while responding to stress, as identified by Hans Selye.

Nervous Exhaustion Condition

A non-specific medical term used historically to describe mental and physical symptoms of stress, anxiety, or depression.

Cancer

A disease characterized by the uncontrolled growth and spread of abnormal cells in the body.