The ____ is not a factor used in the capital asset pricing model (CAPM)to derive the return of an asset.
A)prevailing risk-free rate
B)dividend growth rate
C)market return
D)covariance between the asset's return and the market return
E)All of these are factors used in the CAPM.

Question

Quizplus · Accepted Answer

The capital asset pricing model (CAPM) calculates the expected return of an asset based on its beta and the expected market return, but it does not directly use the dividend growth rate. The key components of CAPM include the risk-free rate, the market return, and the covariance between the asset's return and the market return (expressed through beta), not the dividend growth rate.

The ____ Is Not a Factor Used in the Capital