Which of the following statements is/are true?
A) Both APT and CAPM argue that expected excess return must be proportional to the beta(s).
B) APT and CAPM are the only approaches to measure expected returns in risky assets.
C) Both CAPM and APT are risk-based models.
D) Both APT and CAPM argue that expected excess return must be proportional to the beta(s); and APT and CAPM are the only approaches to measure expected returns in risky assets.
E) Both APT and CAPM argue that expected excess return must be proportional to the beta(s); and Both CAPM and APT are risk-based models.

Question

Quizplus · Accepted Answer

Both statements in option E are true. Both APT and CAPM argue that expected excess return must be proportional to the beta(s), and both models are risk-based approaches to measuring expected returns in risky assets. Option A is only partially true, as it only includes one of the models. Option B is false, as there are other approaches to measuring expected returns in risky assets. Option C is true for both models, but it doesn't include all the facts about them. Option D is a combination of options A and B, and only one of them is partially true.

Which of the Following Statements Is/are True