11. Evidence for or against the CAPM (S8.3) True or false? a. Long-run average rates of return...
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11. Evidence for or against the CAPM (S8.3) True or false?
a. Long-run average rates of return have been higher for high-beta stocks than for low-beta stocks.
b. Low-beta stocks have earned lower rates of return than the CAPM predicts.
c. The CAPM predicts that investors do not bid up the values of diversified firms. This prediction is confirmed in practice.
d. Small-cap stocks have earned higher rates of return than the CAPM predicts.
e. The historical performance of small-cap stocks does not disprove the CAPM, which allows for factors in addition to the market factor.
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Related Book For 
Principles Of Corporate Finance
ISBN: 9781264080946
14th Edition
Authors: Richard Brealey, Stewart Myers, Franklin Allen, Alex Edmans
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