The CAPM is built on historic conditions, although in most cases we use expected future data in applying it. Because betas used

Question

2 years ago

11

The CAPM is built on historic conditions, although in most cases we use expected future data in applying it. Because betas used

in the CAPM are calculated using expected future data, they are not subject to changes in future volatility. This is one of the strengths of the CAPM.
a. True
b. False

Business

1 answer:

dimaraw [331] · Answer 1 · 2022-08-30T09:30:58+03:00

dimaraw [331]2 years ago

4 0

Answer:

False

Explanation:

The reason is that the betas are calculated using the past data which means that the Capital asset pricing model solely rely on the past data which is not the strength of the CAPM. It is basically a weakness of the model so the statement is incorrect.