The Capital Asset Pricing Model asserts that the return is equal to the risk-free rate plus a risk premium for systematic risk.

Question

Quizplus · Accepted Answer

The Capital Asset Pricing Model (CAPM) calculates the expected return of an asset or portfolio based on its beta (systematic risk) relative to the market, multiplied by the market risk premium (difference between the expected return on the market and the risk-free rate). Therefore, the appropriate term to use in the context of CAPM is "expected" return rather than any of the other choices.

The Capital Asset Pricing Model Asserts That the Return Is