According to the Capital Asset Pricing Model (CAPM), which one of the following statements is false?
A. The expected rate of return on a security increases in direct proportion to a decrease in the risk-free rate.
B. The expected rate of return on a security increases as its beta increases.
C. A fairly priced security has an alpha of zero.
D. In equilibrium, all securities lie on the security market line.
E. All of the statements are true.
A. The expected rate of return on a security increases in direct proportion to a decrease in the risk-free rate.
"The expected rate of return on a security increases in direct proportion to a decrease in the risk-free rate" is false.
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Aspects of project feasibility include all of the following except
a. technical feasibility b. economic feasibility c. logistic feasibility d. schedule feasibility
Punctuate the sentence correctly. Adrienne yelled Watch out
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Indicate whether the statement is true or false
Two projects being considered by a firm are mutually exclusive and have the following projected cash flows:
Year Project A Project B 0 -$100,000 -$100,000 1 $39,500 0 2 $39,500 0 3 $39,500 $133,000 Which project(s) should be accepted? A) A, because it has a shorter payback period. B) B, because it has a higher IRR. C) Indifferent, because the projects have equal IRRs. D) Include both in the capital budget, since the sum of the cash inflows exceeds the initial investment in both cases. E) Choose neither, since their NPVs are negative.