One Criticism in Using the CAPM to Calculate the Cost

question 45

Short Answer

One criticism in using the CAPM to calculate the cost of equity capital is that ______________________________ and the __________________________________________________ are quite sensitive to the time period and methodology used in their computation.

---

Definitions:

Fear Spiders

An intense, irrational fear of spiders, known as arachnophobia, which can cause significant anxiety and avoidance behaviors.

Extrinsic Rewards

Benefits and rewards that come from an external source, often used as motivation in various settings.

Pleasure

A feeling of happiness or satisfaction that can be derived from sensory experiences, accomplishments, or social interactions.

Taste Preferences

Individual differences in the liking or disliking of certain flavors and foods.