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LOS c: State the assumptions of the domestic capital asset pricing model (CAPM).
Q1. Users of the capital asset pricing model (CAPM) must assume that:
A) inflation remains moderate.
B) all investors are risk-averse.
C) exchange rates are not excessive.
Q2. Horace Malthusson likes to use the CAPM in his stock valuation. When using the CAPM to value stocks, Malthusson assumes that he can borrow money at the risk-free rate, tax rates are stable, and every investor has the same expected rate of return. The assumptions required by the CAPM differ from Malthusson’s assumptions with regards to:
A) expected returns.
B) tax rates.
C) borrowing capability.
Q3. The capital asset pricing model (CAPM) is least effective when used to value:
A) thinly traded stocks.
B) extremely volatile stocks.
C) bonds. | 
发表于 2009-4-2 13:40
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