Which one of the following is the formula that explains the relationship between the expected return on a security and the level of that security's systematic risk?
A) Capital asset pricing model
B) Time value of money equation
C) Unsystematic risk equation
D) Market performance equation
E) Expected risk formula

Question

Quizplus · Accepted Answer

The formula that explains the relationship between the expected return on a security and the level of that security's systematic risk is the Capital Asset Pricing Model (CAPM). It takes into account the risk-free rate of return, the expected market return, and the security's beta, which represents its level of systematic risk.

Which One of the Following Is the Formula That Explains