Identify the model used to explicitly show the trade-off between risk and return of assets in a capital market.
A)Value at Risk Model
B)Absolute Return Model
C)Modigliani-Miller Model
D)Capital Asset Pricing Model
E)Discounted Cash Flow Model

Question

Quizplus · Accepted Answer

The Capital Asset Pricing Model (CAPM) is used to determine the expected return on an investment given its risk, explicitly showing the trade-off between risk and return in the capital markets.

Identify the Model Used to Explicitly Show the Trade-Off Between