According to the CAPM model: Expected Return = Risk free rate + Risk premium. For investors like David, the model compensates the time value of his money and risk when he invests into any investment over a period of time. What does the risk free rate compensate David for?
A) The time value of his money.
B) The risk he takes.
C) Both the time value of his money and the risk he takes.
D) None
Correct Answer:
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