The CAPM Is Based on an Assumed Efficient Market in Which

question 72

True/False

The CAPM is based on an assumed efficient market in which there are many small investors, each having the same information and expectations with respect to securities; there are no restrictions on investment, no taxes, and no transactions costs; and all investors are rational, view securities similarly, and are risk-averse, preferring higher returns and lower risk.

---

Definitions:

Straight-Line

A method of calculating depreciation of an asset, which allocates an equal amount of depreciation each year over the asset's useful life.

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life, reflecting the asset's consumption, wear and tear, or obsolescence.

Straight-Line Depreciation

A method of allocating the cost of a tangible asset over its useful life in an equal amount per year.

Yearly Depreciation Expense

The allocation of the cost of a tangible asset over its useful life on an annual basis.