One of the Major Reasons That There Is So Little

question 60

Multiple Choice

One of the major reasons that there is so little consensus in practice about which of the four models to use is because

• A) financial economics has reached the point where we can provide a theory of expected returns that gives a precise estimate of the cost of capital.
• B) financial economics has not yet reached the point where we can provide a theory of realized returns that gives a precise estimate of the cost of capital.
• C) financial economics has not yet reached the point where we can provide a theory of expected returns that gives a precise estimate of the cost of capital.
• D) financial economics has reached the point where we can provide a theory of realized returns that gives a precise estimate of the cost of capital.

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Definitions:

Human Capital

The collective skills, knowledge, or other intangible assets of individuals that can be used to create economic value for the individuals, their employers, or their community.

Education and Knowledge

Education and knowledge pertain to the process of acquiring information, skills, values, and understanding through experiences, schooling, and study, which collectively empower individuals and societies.

Factor Distribution

Refers to the way in which income is distributed among the factors of production, typically labor, capital, and land.

Human Capital

The combined abilities, expertise, or other non-physical assets belonging to people that can be leveraged to generate economic worth.