The Capital Asset Model (CAPM)

The Capital Asset Model (CAPM)

University

17 Qs

quiz-placeholder

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The Capital Asset Model (CAPM)

The Capital Asset Model (CAPM)

Assessment

Quiz

Business

University

Hard

Created by

Logeswary Logeswary A/P Mariappan

Used 60+ times

FREE Resource

17 questions

Show all answers

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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