Question: Which statement is correct? Multiple Choice the CAPM predicts that investors are concerned only with the risk that cannot be diversified away. the superior performance

Which statement is correct?

Multiple Choice

  • the CAPM predicts that investors are concerned only with the risk that cannot be diversified away.

  • the superior performance of value stocks is exactly what the CAPM would predict.

  • few financial managers in practice use the CAPM to estimate the cost of capital.

  • the CAPM is a model of actual returns whereas the cost of capital is concerned with expected returns.

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