Which of the Following Is Consistent with the CAPM and Efficient

question 12

Multiple Choice

Which of the following is consistent with the CAPM and efficient capital markets?

• A)A security with a beta of 1 has a return last year of 8% when the market has a return of 12%.
• B)Small stocks with a beta of 1.5 tend to have higher returns on average than large stocks with a beta of 1.5.
• C)A security with only diversifiable risk has an expected return that exceeds the risk-free interest rate.
• D)A security with only systematic risk has an expected return that exceeds the risk-free interest rate.

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Definitions:

"Minus" Lenses

Eyeglass lenses designed to correct myopia (nearsightedness) by diverging light rays before they reach the eye.

Conjunctiva

A thin, transparent membrane that covers the white part of the eyeball and the inner surfaces of the eyelids.

Choroid

A layer of the eye between the retina and the sclera, rich in blood vessels, that provides oxygen and nutrients to the outer parts of the retina.

Sclera

The white outer layer of the eyeball, providing protection and giving the eye its shape.