In the CAPM

question 20

Multiple Choice

In the CAPM,

• A)larger the value of β for a stock, larger is the unsystematic risk involved in investing in the stock.
• B)larger the value of β for a stock, smaller is the unsystematic risk involved in investing in the stock.
• C)larger the value of β for a stock, larger is the systematic risk involved in investing in the stock.
• D)larger the value of β for a stock, smaller is the systematic risk involved in investing in the stock.

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Definitions:

Typical Corporation

A standard business entity where ownership is divided into shares of stock, offering limited liability to its shareholders and being subject to corporate tax rates.

Disposable Income

Money left for savings and expenditures in households after paying income taxes.

Disposable Income

This refers to the amount of money that households have available for spending and saving after income taxes have been accounted for.

Disposable Income

The total funds available for spending and saving by households after subtracting income taxes.