The ____________ provides an unequivocal statement on the expected return-beta relationship for all assets,whereas the _____________ implies that this relationship holds for all but perhaps a small number of securities.
A)APT, CAPM
B)APT, OPM
C)CAPM, APT
D)CAPM, OPM
E)none of the above

Question

Quizplus · Accepted Answer

The first blank refers to the Capital Asset Pricing Model (CAPM), which provides an unequivocal statement on the expected return-beta relationship for all assets. The second blank refers to the Arbitrage Pricing Theory (APT), which implies that this relationship holds for all but perhaps a small number of securities. Therefore, the correct choice is (C): CAPM for the first blank, and APT for the second blank.

The ____________ Provides an Unequivocal Statement on the Expected Return-Beta