In the Equilibrium World of the CAPM, a Security That

question 14

Multiple Choice

In the equilibrium world of the CAPM, a security that is not part of the market portfolio is all of the following EXCEPT

• A) not owned by investors
• B) has an equilibrium price zero
• C) attractive to the very risk-averse investor
• D) has a market value of zero

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Definitions:

Merchantability

A guarantee that a product will meet reasonable quality and performance expectations as implied in a sales contract.

Statute of Limitations

A law that sets the maximum time after an event within which legal proceedings may be initiated.

Uniform Commercial Code

A comprehensive set of laws governing commercial transactions in the United States, designed to standardize and simplify the law across states.

Breach of Contract

The failure to perform as specified in a contractual agreement, warranting legal action for enforcement or damages.