
The Capital Asset Model (CAPM)
Authored by Logeswary Logeswary A/P Mariappan
Business
University
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17 questions
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1.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
The expected return on a security includes a reward for:
market risk and specific risk
specific risk
diversification and portfolio risk
time value of money and market risk
2.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
If a security plots below the security market line, it is:
ignoring all of the security's specific risk
underpriced, a situation that should be temporary
offering too little return to justify its risk
a defensive security, which expects to offer lower returns
3.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
A stock's beta measures the:
average return on the stock
sensitivity of the stock's returns to those of the market portfolio
difference between the return on the stock and the return on the market portfolio
market risk premium on the stock
4.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
The slope of the line fitted to a plot of a stock's returns versus the market's returns measures the:
security market line
beta of the stock
market risk premium
capital asset pricing model
5.
MULTIPLE CHOICE QUESTION
45 sec • 1 pt
What is the beta of a 3-stock portfolio including 25% of stock A with a beta of 0.90, 40% of stock B with a beta of 1.05, and 35% of stock C with a beta of 1.73?
1.0
1.17
1.22
1.25
6.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is the beta of a U.S. Treasury bill?
1.0
−1.0
0
Unknown
7.
MULTIPLE CHOICE QUESTION
45 sec • 1 pt
A project has a beta of 1.24, the risk-free rate is 3.8%, and the market rate of return is 9.2%. What is the project's expected rate of return?
15.21%
11.41%
10.50%
14.61%
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