The risk-adjusted required rate of return excludes
A) the stock's standard deviation
B) the stock's beta
C) the risk-free rate
D) the anticipated return on the market

Question

​The risk-adjusted required rate of return excludes
A) ​the stock's standard deviation
B) ​the stock's beta
C) ​the risk-free rate
D) ​the anticipated return on the market

Quizplus · Accepted Answer

The risk-adjusted required rate of return takes into account the risk of the stock (measured by beta) and the overall market risk (measured by the anticipated return on the market) and subtracts the risk-free rate to determine the expected return. The standard deviation of the stock is a measure of the stock's volatility but is not directly used in calculating the risk-adjusted required rate of return.

​The Risk-Adjusted Required Rate of Return Excludes

The Risk-Adjusted Required Rate of Return Excludes