Which of the Following Statements Is True

question 43

Multiple Choice

Which of the following statements is true?

• A)In CAPM, it is assumed that systematic and unsystematic risk are positively correlated.
• B)In CAPM, it is assumed that systematic and unsystematic risk are negatively correlated.
• C)In CAPM, it is assumed that systematic and unsystematic risk are independent of each other.
• D)None of the listed options are correct.

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Definitions:

Discount on Bonds Payable

The gap between what a bond is actually worth and the price at which it is sold, in cases where it sells for less than its stated value.

Bonds Payable

This term refers to the amount of money a company owes to bondholders at the end of an accounting period, representing a long-term liability.

Present Value

The present valuation of money to be received in the future or recurrent cash inflows, accounting for a chosen rate of interest.

Compounded Annually

Interest on an investment or loan calculated once a year, where each year's interest payment includes interest on the original principal and on the accumulated interest of previous periods.