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:

Comparative Advantage

The ability of a party to produce a particular good or service at a lower opportunity cost than another.

Technology

The application of scientific knowledge for practical purposes, especially in industry and improving human life.

Automobiles

Motor vehicles with four wheels designed to transport people on roads; their availability, culture, and economics significantly impact society.

Comparative Advantage

The ability of an entity to produce goods or services at a lower opportunity cost than others, leading to more efficient trade and production.