1)Which of the following is not one of the underlying assumptions of the Capital Asset Pricing Model (CAPM)?

a)We live in a world of perfect capital markets

b)All investors hold well-diversified portfolios

c)All investors face the same, single-period, time horizon

d)All of the above are assumptions underlying CAPM

2)A project has an asset beta of 0.70. The expected return on the market is 18%, and the relevant risk-free rate is 7%. The project's required rate of return is?

3)Which of the following statements is true?

a)Most corporate CFOs used alternative models to the CAPM when estimating their projects' costs of capital

b)The CAPM will provide a reasonably good cost of capital estimate in many corporate scenarios

c)The CAPM will provide a cost of capital that is accurate to the hundredth of a percent

d)The CAPM provides the most accurate results when it is used to determine which financial investments are best to undertake at any given point in time