Which of the Following Statements Is FALSE

question 59

Multiple Choice

Which of the following statements is FALSE?

• A) The CAPM remains the predominant model use in practice to determine the equity cost of capital.
• B) Low beta stocks have tended to perform somewhat better than the CAPM predicts.
• C) The empirically estimated security market line is somewhat steeper than that predicted by the CAPM.
• D) Some evidence suggests that the market risk premium has declined over time.

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Definitions:

Circularity

A geometric tolerance that limits the deviation of an object’s form from being a perfect circle.

Runout

A term that describes the maximum deviation or variation of an object from its intended perfect form or the total movement of a rotational part.

Points

Specific locations or positions in space, defined by coordinates in a given reference frame, often with no physical size.

Position

The location or arrangement of something in relation to other entities.