Which of the Following Are Assumptions of the Capital Asset

question 9

Multiple Choice

Which of the following are assumptions of the capital asset pricing model?

• A)Funds can be borrowed or lent in unlimited quantities at risk-free rate
• B)The objective of all investors is to maximize their expected utility over the same one-period time frame using the same basis for evaluating investments
• C)There are not taxes or transaction costs associated with any investment
• D)All of the above are correct assumptions

---

Definitions:

Consumer Surplus

The divergence between the total payment consumers are willing to make for a product or service and what they really pay.

Demand Increase

A situation where consumers are willing and able to purchase more of a product or service at each price level, often caused by changes in tastes, income, or prices of related goods.

Consumer Surplus

The separation in monetary terms between what consumers are willing to pay for a good or service and their final payment amount.

Cost of Producing Chairs

The total expenses incurred in the manufacturing of chairs, including materials, labor, and overhead costs.