This model includes an equation that relates a stock's required return to an appropriate risk premium:
A) asset pricing
B) behavioral finance
C) beta
D) efficient markets

Question

Quizplus · Accepted Answer

The equation that relates a stock's required return to an appropriate risk premium is a fundamental part of asset pricing theories. This equation takes into account the perceived risk associated with a particular investment and provides a basis for calculating its expected return. Behavioral finance focuses more on how psychological and emotional factors can influence individual decision-making, while beta is a tool used to measure a stock's volatility in relation to the overall market. Efficient markets theory posits that all available information is already reflected in a stock's price, making it difficult to consistently outperform the market.

This Model Includes an Equation That Relates a Stock's Required