The ________ describes the relationship between nondiversifiable risk and return for all assets.
A) EBIT-EPS approach to capital structure
B) supply-demand function for assets
C) capital asset pricing model
D) Gordon model

Question

Quizplus · Accepted Answer

The capital asset pricing model (CAPM) describes the relationship between nondiversifiable risk (measured by beta) and expected return for all assets in a given market. It is widely used in finance to determine expected returns and to price risky assets. A, B, and D are not related to the relationship between nondiversifiable risk and return.

The ________ Describes the Relationship Between Nondiversifiable Risk and Return