Which one of these statements is correct concerning the CAPM?

Multiple Choice

• CAPM is used quite frequently by firms in their capital budgeting process.

• The market rate of return is most commonly based on the forecasted return on the market for the next 5-year period.

• The expected return on the 30-year U.S. Treasury bond is the most commonly used as the risk-free rate of return.

• The CAPM is the only available method for determining an appropriate discount rate for a proposed project.

• An increase in the risk-free rate combined with a beta greater than 1.0 increases the discount rate computed using the CAPM.