CAPM APT Quiz 2
Quiz by Jamal Haider Naqvi
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- Q1
The capital asset pricing model (CAPM) extends capital market theory in a way that allows investors to evaluate the risk–return trade-off for both diversified portfolios and individual securities.
truefalseTrue or False30s - Q2
Beta can be thought of as indexing the asset’s systematic risk to that of the market portfolio.
truefalseTrue or False30s - Q3
CAPM states that only the overall market risk premium matters
truefalseTrue or False30s - Q4
Beta is a measure of unsystematic risk
falsetrueTrue or False30s - Q5
Securities with returns that lie below the security market line are undervalued
falsetrueTrue or False30s - Q6
Studies have shown the beta is more stable for portfolios than for individual securities
truefalseTrue or False30s - Q7
The APT does not require a market portfolio.
truefalseTrue or False30s - Q8
A major advantage of the Arbitrage Pricing Theory is the risk factors are clearly and universally identifiable
falsetrueTrue or False30s - Q9
The APT assumes that security returns are normally distributed
falsetrueTrue or False30s - Q10
Multifactor models of risk and return can be broadly grouped into models that use macroeconomic factors and models that use microeconomic factors
truefalseTrue or False30s