The expected return on a security in the market context is:
A) a negative function of execs security risk.
B) a positive function of the beta.
C) a negative function of the beta.
D) a positive function of the excess security risk.
E) independent of beta.

Question

Quizplus · Accepted Answer

The expected return on a security in the market context is positively related to its beta, according to the Capital Asset Pricing Model (CAPM). The beta measures the security's volatility or risk relative to the overall market, and a higher beta indicates a higher expected return to compensate for the increased risk.

The Expected Return on a Security in the Market Context