In Practice Which Market Index Is Most Widely Used as a Proxy

question 49

Multiple Choice

In practice which market index is most widely used as a proxy for the market portfolio in the CAPM?

• A) Dow Jones Industrial Average
• B) Wilshire 5000
• C) S&P 500
• D) Canadian Treasury Bill

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Definitions:

CCA Rate

Capital Cost Allowance Rate, which is the rate at which businesses in Canada can claim depreciation on certain assets for tax purposes.

Required Rate of Return

The minimum annual percentage return an investor expects to receive from an investment, considering its risk.

NPV

Net Present Value; a calculation used to assess the profitability of an investment by summing the present values of incoming and outgoing cash flows.

CCA Class

In Canadian taxation, a classification system for capital cost allowance that categorizes assets for depreciation purposes.