A Criticism of the CAPM Is That It

question 38

Multiple Choice

A criticism of the CAPM is that it:

• A) ignores the return on the market portfolio.
• B) ignores the risk-free return.
• C) requires a single measure of systematic risk.
• D) utilizes too many factors.

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Definitions:

Dependent Variable

In experimental research, the variable that is tested and measured to see if it is influenced by changes in the independent variable.

Independent Variable

In an experimental setting, the variable that is manipulated or changed to observe its effect on the dependent variable.

Randomly Assigned

A method used in experimental research where participants are allocated to different groups in a way that every individual has an equal chance of being assigned to any group.

Levels

Distinct layers or degrees within a structure, organization, or system, often used to describe rankings, stages of development, or the complexity of something.