The Capital Asset Pricing Model asserts that the ________ return is equal to the risk-free rate plus a risk premium for systematic risk.
A)expected
B)holding period
C)realised
D)ex-post

Question

Quizplus · Accepted Answer

The Capital Asset Pricing Model (CAPM) is used to determine the expected return on an asset based on its level of systematic risk. According to CAPM, the expected return on an asset can be calculated as the risk-free rate plus a risk premium for systematic risk, which is represented by the asset's beta coefficient. Therefore, the answer is A (expected return). The other options (holding period return, realised return, and ex-post return) are not directly related to CAPM.

The Capital Asset Pricing Model Asserts That the ________ Return