According to the CAPM, a stock's expected return is positively related to its Beta.

Question

Quizplus · Accepted Answer

According to the Capital Asset Pricing Model (CAPM), a stock's expected return is positively related to its Beta. Beta measures the sensitivity of a stock's returns to changes in the overall market. The formula for CAPM is: 
Expected Return = Risk-Free Rate + Beta*(Market Return - Risk-Free Rate)
Thus, stocks with higher beta will have a higher expected return under the CAPM.

According to the CAPM, a Stock's Expected Return Is Positively