Quiz Ch 08 – T/F CAPM Theoretical Requirement for Market Portfolio
Principles of Corporate Finance
Brealey, Myers, and Allen
13th Edition
True or false: The CAPM, in theory, dictates that the market portfolio should include solely common 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.
True or false: Short-term daily returns for stocks are closer to the normal distribution than the lognormal distribution.
True or false: Achieving a return above the efficient frontier of common stocks is not possible without a risk-free asset or another uncorrelated asset in your portfolio.
True or false: Efficient portfolios are those that yield the maximum expected return for a given level of variance (or standard deviation).
True or false: Aversion to uncertainty is common among most investors.
True or false: Investors predominantly emphasize risks that can be diminished through diversification.
True or false: Investors generally prefer portfolios with greater Sharpe ratios holding other factors constant.