1. Which statement is not true regarding the market portfolio? a.It lies on the efficient frontier. b.All securities in the market portfolio are held in proportion to their market values. c.It is the tangency point between the capital market line and the indifference curve. d.All of the options are true. 2. Which of the following are used by fundamental analysts to determine proper stock prices? I.Trendlines II.Earnings III.Dividend prospects IV.Expectations of future interest rates V.Resistance levels
Risk and return
Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary.
Capital Asset Pricing Model
Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.
1. Which statement is not true regarding the market portfolio?
a.It lies on the efficient frontier.
b.All securities in the market portfolio are held in proportion to their market values.
c.It is the tangency point between the capital market line and the indifference curve.
d.All of the options are true.
2. Which of the following are used by fundamental analysts to determine proper stock prices?
I.Trendlines
II.Earnings
III.Dividend prospects
IV.Expectations of future interest rates
V.Resistance levels
b.I, II, and III
c.II, III, and IV
d.All of the items are used by fundamental analysts.
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