___________ a relationship between expected return and risk.
A)APT stipulates
B)CAPM stipulates
C)Both CAPM and APT stipulate
D)Neither CAPM nor APT stipulate
E)No pricing model has found

Question

Quizplus · Accepted Answer

Both CAPM and APT stipulate a relationship between expected return and risk. CAPM suggests that the expected return of an asset can be calculated using the asset's beta (a measure of systematic risk) and the market risk premium. APT suggests that the expected return of an asset can be calculated using multiple macroeconomic factors and their sensitivity (factor loadings) to those factors. Both models use risk as a key determinant of expected return.

___________ a Relationship Between Expected Return and Risk