working with the CAPM, which of the following factors can be determined with the most precision?
A) The beta coefficient, bi, of a relatively safe stock.
B) The most appropriate risk-free rate, rRF.
C) The expected rate of return on the market, rM.
D) The beta coefficient of "the market," which is the same as the beta of an average stock.
E) The market risk premium (RPM).

Question

Quizplus · Accepted Answer

The beta coefficient of "the market" is a well-established and widely accepted value that is regularly calculated and updated by various financial institutions. Therefore, it can be determined with the most precision compared to other factors listed. Factors such as the risk-free rate and market risk premium are subject to fluctuations and estimates, while the beta of a relatively safe stock may be influenced by small sample sizes and specific company factors. Additionally, the expected rate of return on the market may vary depending on individual analysts' predictions and can be subject to significant changes.

Working with the CAPM, Which of the Following Factors Can