Which of the Following Statements Is False

question 14

Multiple Choice

Which of the following statements is false?

• A) The CAPM states that we should use the risk-free interest rate corresponding to the investment horizon of the firm's investors.
• B) To determine the risk premium for a stock using the security market line, we need an estimate of the market risk premium.
• C) When surveyed, the vast majority of large firms and financial analysts reported using the yields of Treasury Bills to determine the risk-free rate.
• D) The risk-free interest rate is generally determined using the yields of Canadian Treasury securities, which are free from default risk.

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Definitions:

Seniority

The concept of giving priority or preference to individuals based on the length of time they have been employed or involved in an organization.

Charisma

A special charm or allure that inspires allegiance; an amalgam of inspirational traits or qualities of the leader, such as optimism, sense of adventure, and commitment to a cause.

Charisma

A personal quality that gives an individual influence or authority over large numbers of people, often resulting in a strong, almost magnetic, personal appeal.

Stability

The state of being resistant to change and not prone to wild fluctuations in emotion or other areas of life.