The capital asset pricing model

Question

Quizplus · Accepted Answer

The capital asset pricing model expresses a linear relationship between returns on individual stocks and the market over time. It is a widely accepted model for understanding and measuring the risk and return of an individual stock or portfolio. Therefore, option A is the correct answer. Option B is incorrect because the model can be used to examine the risk of the stock as well as the returns. Option C is incorrect because although the model has limitations, it is still useful in understanding the relationship between risk and return in the market. Option D is incorrect because only option A is the correct answer.

The Capital Asset Pricing Model