What Does It Mean When the CAPM Is Called "Robust

question 51

Multiple Choice

What does it mean when the CAPM is called "robust?"

• A)The CAPM requires no assumptions.
• B)Even if most of the assumptions of the CAPM are relaxed,most of the conclusions will still hold.
• C)The CAPM is based on realistic assumptions.
• D)No other model can represent stock returns better than the CAPM.

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Definitions:

Trait Theory

A perspective in psychology that focuses on the identification and measurement of specific personality characteristics and how they differ among individuals.

Stability

The quality of being resistant to change and capable of maintaining a consistent state over time.

Extraversion

A personality trait characterized by outgoing, sociable, and energetic behavior.

Reciprocal Determinism

A concept in psychology proposed by Albert Bandura that suggests individual behavior and the environment mutually influence each other.