Author Question: The Capital Asset Pricing Model (CAPM) includes which of the following in its base ... (Read 29 times)

moore.cailinf · **on:** Mar 29, 2022

Question 1

OKAY stock has a beta of 0.8. The market as a whole is expected to decline by 12% thereby causing OKAY stock to
◦ decline by 9.6%.
◦ decline by 12.5%.
◦ increase by 9.6%.
◦ increase by 12%.

Question 2

The Capital Asset Pricing Model (CAPM) includes which of the following in its base assumptions?

I.

Investors buying positive beta stocks should earn a minimum return equal to the risk-free rate.

II.	Investors in the market should earn a return greater than the return on the overall market.

III.	Investors should be rewarded for the amount of risk they assume.

IV.	Investors should earn a return located above the Security Market Line.

◦ I and III only
◦ II and IV only
◦ I, II and III only
◦ I, III and IV only

Fundamentals of Investing ¦ Zutter, Smart ¦ 14^th Edition

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Marked as best answer by moore.cailinf on Mar 29, 2022

Rcfelber

Full Member
Posts: 151

Reply #1 on: Mar 29, 2022

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moore.cailinf

Member
Posts: 126

Reply 2 on: Mar 29, 2022

Excellent

tranoy

Member
Posts: 344

Reply 3 on: Yesterday

Great answer, keep it coming

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