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Chapter 9 - Study Guide - Chapter 9 ASSET PRICING MODELS 1...

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Chapter Nine Asset Pricing Models 105 Chapter 9 ASSET PRICING MODELS 1. The Capital Asset Pricing Model: a. has serious flaws because of its complexity. b. measures relevant risk of a security and shows the relationship between risk and expected return. c. was developed by Markowitz in the 1930s. d. discounts almost all of the Markowitz portfolio theory. (b) 2. Which of the following is not one of the assumptions of the CMT? (c) 3. Which of the following is an assumption of the CMT? (b) 4. Which of the following regarding investors and the CMT is true? (b)
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Chapter Nine Asset Pricing Models 106 5. The _______ is typically taken to be the risk-free rate. a. savings account b. certificate of deposit c. Treasury bill d. Treasury bond (c) 6. When markets are in equilibrium, the CML will be upward sloping (b)
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