16_CAPMI_sol

16_CAPMI_sol - BM 410 HW#16 Multiple Choice 1) Holding all...

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BM 410 HW#16 Multiple Choice 1) Holding all else constant, a higher price implies a _________ expected return. A) lower B) higher C) more accurate D) none of the above 2) The aggregation assumption of the CAPM (assumption 1) allows us to A) Conclude that the R-investor is “happy” B) Lump all investors into one big investor called the “representative investor". C) Consider everyone has having different forecasts of returns, variances and covariances. D) Assume the R-investor holds the tangency portfolio. 3) The preferences assumption (assumption 2) of the CAPM says that A) The R-investor has a variety of objectives when choosing portfolio weights. B) The R-investor only cares about maximizing his Sharpe ratio. C) The R-investor always prefers stocks with lower volatility. D) The R-investor only cares about maximizing expected return. 4) The supply=demand assumption (assumption 3) of the CAPM says that A) The R-investor holds the value weighted portfolio of all assets in the economy only if the economy is in equilibrium. B)
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16_CAPMI_sol - BM 410 HW#16 Multiple Choice 1) Holding all...

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