The Issue That Realised Returns Only Relate to Actual Returns

question 9

Multiple Choice

The issue that realised returns only relate to actual returns in the long-term is relevant to use of the CAPM because:

• A) beta is often measured with error
• B) of issues raised in Roll's critique
• C) no risk-free asset exists
• D) the CAPM is an ex-ante model

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Definitions:

Primary User Groups

The main categories of users who rely on a company's financial information, typically including investors, creditors, and regulatory agencies.

Financial Information

Data pertaining to the financial status or operations of a business, including balance sheets, income statements, and cash flow statements.

Constraints

Limitations or restrictions that can affect the course of action or outcomes in a specific situation.

IASB/FASB Boards

The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) are organizations that develop and promulgate accounting standards.