The Capital Asset Pricing Model (CAPM) Extends Capital Market Theory

question 79

True/False

The capital asset pricing model (CAPM) extends capital market theory in a way that allows investors to evaluate the risk-return trade-off for both diversified portfolios and individual securities.

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Definitions:

Alternative Good

A product or service that consumers may choose as a substitute for another good or service.

Quantity Supplied

The amount offered for sale per period at a particular price, as reflected by a point on a given supply curve.

Resource Prices

Prices of inputs used in the production of goods and services, including raw materials, labor, and capital.

Technological Improvement

Advances in technology that enhance efficiency, productivity, or capabilities in production or services.