Q745
In capital asset pricing model, investors assume that buying and selling activity will
A.
affect stock prices
B.
not affect stock prices
AnswerC.
have high taxes
D.
high transaction cost
Answer: Option B
Solution
Answer: Option B
Solution:
In capital asset pricing model, investors assume that buying and selling activity will not affect stock prices. The Capital Asset Pricing Model (CAPM) describes the relationship between systematic risk and expected return for assets, particularly stocks. CAPM is widely used throughout finance for pricing risky securities and generating expected returns for assets given the risk of those assets and cost of capital.