The Capital Asset Pricing Model Predicts That Corporate Diversification That

question 29

True/False

The capital asset pricing model predicts that corporate diversification that reduces the unsystematic risk of a company's securities will result in those securities being higher valued by the stock market.

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Definitions:

Return on Investment

A performance measure used to evaluate the efficiency or profitability of an investment, calculated by dividing net profit by the cost of the investment.

Units per Year

A measure of production output or activity volume, indicating the number of units produced or sold within a year.

ROI Computation

The calculation of Return on Investment, which measures the gain or loss generated on an investment relative to the amount of money invested.

Net Book Value

The value of an asset after accounting for depreciation or amortization found on a company's balance sheet.