Quiz Ch 08 – T/F APT and Market Portfolio Efficiency
Principles of Corporate Finance
Brealey, Myers, and Allen
13th Edition
True or false: According to the Arbitrage Pricing Theory (APT), the market portfolio is considered efficient.
True or false: According to the Arbitrage Pricing Theory (APT), the market portfolio is considered efficient.
True or false: The beta for risk-free U.S. Treasury bills is higher than zero.
True or false: U.S. Treasury bills, being risk-free, have a beta of zero.
True or false: Beta measures how much a stock adds to the risk of a well-diversified portfolio.
True or false: The CAPM and the APT emphasize that the expected return is unaffected by unique risk.
True or false: The CAPM has received substantial empirical support in explaining stock returns, particularly with high-beta stocks.
True or false: The CAPM, in theory, dictates that the market portfolio should include solely common stocks.
True or false: The CAPM asserts that every investment falls on the security market line.
True or false: The CAPM posits that the market portfolio serves as a tangency portfolio.
True or false: The return correlation between a risk-free asset and any common stock is zero.