Assume the CAPM Is the Correct Asset Pricing Model $0.150$

question 14

Multiple Choice

Assume the CAPM is the correct asset pricing model.An asset has a standard deviation of 40% and the market has a standard deviation of 15%.What would the correlation of the asset with the market need to be if the asset were to have the same expected return as the market?

• A) \( 0.150 \)
• B) \( 0.375 \)
• C) \( 0.600 \)
• D) \( 0.667 \)

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Definitions:

Feature Arrangements

The way in which perceptual features are organized and structured in our cognitive processes to represent objects or stimuli.

Mental Images

Visual, or other sensory, representations in the mind that are not currently being perceived but can be recalled or imagined.

Real-World Objects

Physical items that exist in the environment, capable of being seen, touched, and interacted with, outside of theoretical or virtual constructs.

Spatial Equivalence

The concept that different physical spaces or arrangements can be perceived as similar or having the same value in terms of their spatial properties.