Which of the following does not affect the capital asset pricing model in respect of an individual security?
A)The expected return on the market
B)The market risk of the security
C)The expected return on the security
D)The beta of the security

Question

Quizplus · Accepted Answer

The CAPM equation is: Expected Return on a Security = Risk-Free Rate + (Beta of Security x Market Risk Premium). The only variable that is not directly related to the security is the expected return on the market. The market risk of the security and its beta are factors that directly affect the CAPM calculation.

Which of the Following Does Not Affect the Capital Asset