Based on the capital asset pricing model,investors are compensated based on which of the following?
I.Market risk premium
II.Portfolio standard deviation
III.Portfolio beta
IV.Risk-free rate
A)I and III only
B)II and IV only
C)I, II, and III only
D)I, III, and IV only
E)I, II, III, and IV

Question

Quizplus · Accepted Answer

According to the capital asset pricing model, investors are compensated based on market risk premium (I), portfolio beta (III), and risk-free rate (IV). Portfolio standard deviation (II) is not a factor in determining compensation according to CAPM. Therefore, the correct answer is D, which includes options I, III, and IV.

Based on the Capital Asset Pricing Model,investors Are Compensated Based