Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please help with the third and final part! Thanks! State whether each of the following is inconsistent with an efficient capital market, the CAPM, or

Please help with the third and final part! Thanks! image text in transcribed
State whether each of the following is inconsistent with an efficient capital market, the CAPM, or both: a. A security with only diversifiable risk has an expected return that exceeds the risk-free interest rate. b. A security with a beta of 1 had a return last year of 15% when the market had a return of 9%. c. Small stocks with betas of 1.5 tend to have higher returms on average than large stocks with betas of 1.5 a. A security with only diversifiable risk has an expected return that exceeds the risk-free interest rate. (Select the best choice below.) O A. The statement is consistent with both the CAPM and an efficient capital market. B. The statement is inconsistent with an efficient capital market but not necessarily with the CAPM. C. The statement is inconsistent with both the CAPM and an efficient capital market. D. The statement is inconsistent with the CAPM but not necessarily with an efficient capital market. b. A security with a beta of 1 had a return last year of 15% when the market had a return of 9%. (Select the best choice below.) XA. The statement is inconsistent with an efficient capital market but not necessarily with the CAPM. O B. The statement is inconsistent with both the CAPM and an efficient capital market Cc. The statement is consistent with both the CAPM and an efficient capital market. O D. The statement is inconsistent with the CAPM but not necessarily with an efficient capital market. c. Small stocks with betas of 1.5 tend to have higher returns on average than large stocks with betas of 1.5. (Select the best choice below) O A. The statement is inconsistent with the CAPM but not necessarily with an efficient capital market. O B. The statement is consistent with both the CAPM and an efficient capital market. O C. The statement is inconsistent with both the CAlkM and an efficient capital market. O D. The statement is inconsistent with an efficient capital market but not necessarily with the CAPM

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

An Introduction To Trading In The Financial Markets Market Basics

Authors: R. Tee Williams

1st Edition

0123748380, 9780123748386

More Books

Students also viewed these Finance questions

Question

Describe alternative paid time off policies.

Answered: 1 week ago

Question

Describe customized benefit plans.

Answered: 1 week ago