The Formula for the Capital Asset Pricing Model Is

question 88

Multiple Choice

The formula for the Capital Asset Pricing Model is:

• A) E(R_i) = R_f + b_i(E(R_m) - R_f)
• B) E(R_i) = R_f + b_iE(R_m)
• C) E(R_i) =b_i(E(R_m) - R_f)
• D) E(R_i) + R_f = b_i(E(R_m) - R_f)

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Definitions:

Direct Method

A way of preparing the cash flow statement where actual cash inflows and outflows from operating activities are reported, as opposed to the indirect method.

Operating Expenses

The costs associated with the normal operations of a business, such as rent, utilities, and payroll, excluding cost of goods sold.

Dividends

Payments made by a corporation to its shareholder members, usually as a distribution of profits.

Indirect Method

A way of preparing the cash flow statement where net income is adjusted for changes in balance sheet accounts to reflect cash transactions.