What Are Three Main Assumptions Underlie the CAPM

question 13

Essay

What are three main assumptions underlie the CAPM?

---

Definitions:

Centralization

The consolidation of decision-making authority at the top levels of an organization.

Owner/Manager-Operated

A business model where the owner actively manages the day-to-day operations of the company.

Negotiated Price Approach

The negotiated price approach involves establishing the price of a product or service through direct negotiation between sellers and buyers, rather than using fixed prices or market rates.

Transfer Price

The price at which goods and services are traded between departments within the same company or between subsidiaries, often used for budgeting and tax purposes.