According to the capital asset pricing model,the expected return on a security is
A)negatively and linearly related to the security's beta.
B)positively and linearly related to the security's beta.
C)positively and nonlinearly related to the security's beta.
D)positively and linearly related to the security's variance.
E)negatively and nonlinearly related to the security's beta.

Question

Quizplus · Accepted Answer

The capital asset pricing model suggests that expected return on a security is positively and linearly related to the security's beta. Beta measures the systematic risk of a security in relation to the overall market, and the model proposes that investors require compensation in the form of higher returns for bearing higher levels of systematic risk.

According to the Capital Asset Pricing Model,the Expected Return on a Security