Which of the Following Is Consistent with the CAPM and Efficient

question 12

Multiple Choice

Which of the following is consistent with the CAPM and efficient capital markets?

• A)A security with a beta of 1 has a return last year of 8% when the market has a return of 12%.
• B)Small stocks with a beta of 1.5 tend to have higher returns on average than large stocks with a beta of 1.5.
• C)A security with only diversifiable risk has an expected return that exceeds the risk-free interest rate.
• D)A security with only systematic risk has an expected return that exceeds the risk-free interest rate.

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Definitions:

Nerve Processes

The extensions from a neuron, including dendrites and axons, that transmit electrical and chemical signals to and from the nerve cell body.

Clinical Trials

Research studies performed in people that are aimed at evaluating a medical, surgical, or behavioral intervention.

Consensual Experiments

The experimental research in which all participants give their informed consent prior to participation.

Pineal Body

A small endocrine gland in the brain that produces the hormone melatonin, which regulates sleep-wake patterns and seasonal biological rhythms.