Components of the capital asset pricing model include
A) a stock's market price
B) the standard deviation of a stock's return
C) the rate on a risk-free security
D) the investor's need for income versus capital gains

Question

Components of the capital asset pricing model include​
A) ​a stock's market price
B) ​the standard deviation of a stock's return
C) ​the rate on a risk-free security
D) ​the investor's need for income versus capital gains

Quizplus · Accepted Answer

The components of the capital asset pricing model (CAPM) include the rate on a risk-free security, the expected return on the market, and the stock's beta (systematic risk). Therefore, choice C (the rate on a risk-free security) is the best choice as it forms a key component of the CAPM. Choices A, B, and D are not direct components of the CAPM.

Components of the Capital Asset Pricing Model Include​

Components of the Capital Asset Pricing Model Include