According to capital asset pricing model assumptions, quantities of all assets are______________?
Correct answer: A. Given and fixed
- A. Given and fixed
- B. Not given and fixed
- C. Not given and variable
- D. Given and variable
Explanation
CAPM assumes that the quantities or supplies of assets are given and fixed, so investors trade claims whose total supply is predetermined. This supports equilibrium pricing in the model.
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About Business Finance
Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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