Which of the Following Statements Is/are True

question 3

Multiple Choice

Which of the following statements is/are true?

• A) Both APT and CAPM argue that expected excess return must be proportional to the beta(s).
• B) APT and CAPM are the only approaches to measure expected returns in risky assets.
• C) Both CAPM and APT are risk-based models.
• D) Both APT and CAPM argue that expected excess return must be proportional to the beta(s); and APT and CAPM are the only approaches to measure expected returns in risky assets.
• E) Both APT and CAPM argue that expected excess return must be proportional to the beta(s); and Both CAPM and APT are risk-based models.

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Definitions:

Variable Selling Cost

Selling costs that vary directly with the volume of sales, such as commissions or shipping fees.

Make-Or-Buy Decision

A decision-making process used by companies to determine whether to produce a product in-house or purchase it from an external supplier.

Cost Savings

The reduction in expenses achieved through efficiencies, economies of scale, negotiations, or eliminating unnecessary expenses.

Differential Revenue

The difference in revenue from one alternative to another, used in decision-making processes.