The single-factor model generally uses ________ as the single factor.
A)arbitrage fees
B)GNP
C)the inflation rate
D)the market risk premium
E)the risk-free return

Question

Quizplus · Accepted Answer

The single-factor model typically uses the market risk premium as the single factor. The market risk premium is the difference between the expected return on the market portfolio and the risk-free rate. It is a measure of the excess return that investors demand for taking on the risk of the overall market.

The Single-Factor Model Generally Uses ________ as the Single Factor