Suppose the CAPM Is True

question 30

True/False

Suppose the CAPM is true.Asset X has a standard deviation of 25%.The risk-free asset,by definition,has a standard deviation of 0%.Therefore,the expected return on asset X must exceed the risk-free rate.

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Definitions:

Logical Principle

Fundamental concepts that underlie logical reasoning, often used as the basis for drawing conclusions or making decisions.

Classification

The logical principle that things can be organized into groups (or categories or classes) according to some characteristic that they have in common.

Seriation

The concept that things can be arranged in a logical series, such as the number sequence or the alphabet.

Information-Processing Perspective

A psychological approach that likens the human mind to a computer, focusing on how people process, store, and retrieve information.