According to the capital asset pricing model, which of the following factors is not a determinant of a security's expected return?
A) Market risk
B) Risk-free rate of interest
C) Expected return on the market
D) Volatility of the stock's returns.

Question

Quizplus · Accepted Answer

The capital asset pricing model (CAPM) determines a security's expected return based on three factors: the risk-free rate of interest (B), the expected return on the market (C), and the stock's beta (which measures the stock's market risk relative to the average market risk, A). The volatility of the stock's returns (D) is not directly a determinant in the CAPM formula; instead, the model focuses on the stock's systematic risk (market risk) as opposed to its total risk (which includes unsystematic risk).

According to the Capital Asset Pricing Model, Which of the Following