Ask Question
6 November, 18:33

The capital asset pricing theory is based on the premise that: a. only unsystematic variability in cash flows is relevant. b. only systematic variability in cash flows is relevant. c. both systematic and unsystematic variability in cash flows are relevant. d. neither systematic nor unsystematic variability in cash flows is relevant.

+5
Answers (1)
  1. 6 November, 22:06
    0
    Option B Only systematic variability in cash flows is relevant

    Explanation:

    The reason is that CAPM assumes that all the investors have well diversified investments which completely eliminates the unsystematic risk. This means that the firm will only compensate for the business systematic risk which is relevant. So the right answer here which talks about only the systematic risk is option B
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “The capital asset pricing theory is based on the premise that: a. only unsystematic variability in cash flows is relevant. b. only ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers