The difference between the expected return on a stock with a beta of 1.0 and the risk free rate is the
A) alpha.
B) market risk premium.
C) undiversifiable return.
D) expected return.

Question

Quizplus · Accepted Answer

The difference between the expected return on a stock with a beta of 1.0 and the risk-free rate is known as the market risk premium. This represents the extra return investors expect to earn from holding a risky market portfolio instead of risk-free assets.

The Difference Between the Expected Return on a Stock with a Beta