The Capital Asset Pricing Model (CAPM)

question 12

Multiple Choice

The capital asset pricing model (CAPM) :

• A) recognises a positive relationship between risk and return.
• B) uses beta as the relevant measure of market risk.
• C) requires a value for the risk-free rate.
• D) all of the above.

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Definitions:

Nonmonetary Costs

Costs associated with a purchase that are not financial, such as time spent, effort, and emotional stress.

Opportunity Costs

The value of the best alternative forgone when a decision is made to pursue a particular action or investment.

Tangible Costs

Direct costs associated with the production or purchase of a good or service that can be easily quantified.

Value

The importance, worth, or usefulness of something to a person or in the market.