A stock's required rate of return as determined by the capital asset pricing model is influenced by
A) the risk-free rate.
B) the expected return on the market.
C) the standard deviation of past returns.
D) A and B, but not C.

Question

Quizplus · Accepted Answer

The capital asset pricing model (CAPM) determines a stock's required rate of return based on the risk-free rate, the expected return on the market, and the stock's beta (which measures its volatility relative to the market), not the standard deviation of its past returns.

A Stock's Required Rate of Return as Determined by the Capital