the capital asset pricing model (capm) assumes which of the following course hero

by Valerie Stark Published 2 years ago Updated 1 year ago 3 min read

What does CAPM stand for?

May 11, 2016 · 56. According to CAPM, the amount of reward an investor receives for bearing the risk of an individual security depends upon the: A.amount of total risk assumed and the market risk premium. B.market risk premium and the amount of systematic risk inherent in the security. C.risk free rate, the market rate of return, and the standard deviation of ...

What are the assumptions of the CAPM?

23) The capital asset pricing model (CAPM) assumes which of the following? I. A risk-free asset has no systematic risk. II. Beta is a reliable estimate of total risk. III. The reward-to-risk ratio is constant. IV. The market rate of return can be approximated.

What is a well diversified portfolio in CAPM?

The capital asset pricing model ( CAPM ) assumes which of the following ? I. a risk - free asset has no systematic risk . II. beta is a reliable estimate of total risk . III . the reward - to - risk ratio varies across different firms . IV . the market rate of return can be approximated .

What is the expected market rate of return according to CAPM?

7. The capital asset pricing model (CAPM) assumes which of the following? I. A risk-free asset has no systematic risk. II. Beta is a reliable estimate of total risk. III. The reward-to-risk ratio is constant. IV. The market rate of return can be approximated. A. I and III only B. II and IV only C. I, III, and IV only D. II, III, and IV only E. I, II, III, and IV

Which of the following does the Capital Asset Pricing Model CAPM assume?

The Capital Asset Pricing Model (CAPM) is the product of a financial investment theory that reflects the relationship between risk and expected return. The model assumes a linear relationship. The Capital Asset Pricing Model is used to forecast returns that can be obtained with risk-bearing asset classes.

Which of the following does the Capital Asset Pricing Model CAPM assume quizlet?

1) The capital asset pricing model (CAPM) assumes that the stock market is dominated by well-diversified investors who are concerned only with market risk.

What is the Y intercept of the security market line?

risk-free rate

The Security Market Line: This is an example of a security market line graphed. The y-intercept of this line is the risk-free rate (the ROI of an investment with beta value of 0), and the slope is the premium that the market charges for risk.

Which one of the following is the vertical intercept of the Security Market Line quizlet?

The vertical intercept of the Security Market Line is determined by the: risk-free interest rate. Refer to the graph above. Which of the three Security Market Lines depicts the situation where investors most dislike risk?