Question

In the Capital Asset Pricing Model, the market risk premium is estimated over a long period of time because: more data is always better than less. a longer holding period gives a more reliable estimate because it is, in effect, a larger sample size. almost all investors hold stocks for many years, so it matches their investment horizon. historical returns are the best indicators of future returns.

Answer 1

Mark, Alisha, Jasmine -- please use the same name for your posts.

Also -- your questions and answer choices would be a lot easier to read if you put each choice on a separate line and identified them as a, b, c, d.

Answer 2

In the Capital Asset Pricing Model, the market risk premium is estimated over a long period of time because:

A. more data is always better than less.

B. a longer holding period gives a more reliable estimate because it is, in effect, a larger sample size.

C. almost all investors hold stocks for many years, so it matches their investment horizon.

D. historical returns are the best indicators of future returns.

Answer 3

B.

http://www.investopedia.com/terms/c/capm.asp