Quiz Ch 07 – Alpha Measurement
Essentials of Investments
Bodie, Kane, and Marcus
12th Edition
What does a stock’s alpha quantify?
What does a stock’s alpha quantify?
For which types of investments is the Security Market Line (SML) applicable, and for which types is the Capital Market Line (CML) applicable?
What strategy enables individuals to gain from an arbitrage opportunity?
What assumptions does the simple CAPM model make?
What role does a stock’s beta play in a single-factor market model?
What features do securities exhibit when considered fairly priced in the capital asset pricing model?
To the stock market, how does the systematic risk of a stock with a beta of 1.3 stands?
What are the likely outcomes if many investors opt to buy stocks, potentially driving up prices?
Which statements are accurate in a basic CAPM context?
What criterion does the capital asset pricing model specify for securities to achieve equilibrium?