The Capital Asset Pricing Model (CAPM) is a mathematical model that depicts the
A) positive relationship between risk and return.
B) exact price that an investor should be willing to pay for any given investment.
C) standard deviation between a risk premium and an investment's expected return.
D) difference between a risk- free return and the expected rate of inflation.

Question

Quizplus · Accepted Answer

CAPM describes the positive relationship between risk and return, suggesting that higher risk investments should yield higher expected returns.

The Capital Asset Pricing Model (CAPM) Is a Mathematical Model