The _________________________ develops a model of the return needed to own a share of stock based on the risk free return, and the market and firm specific risks.

Question

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The Capital Asset Pricing Model (CAPM) is a widely used model in finance to determine the expected return on an asset, typically a stock, based on the risk-free rate, market risk premium, and the stock's beta (systematic risk). The model takes into consideration the risk-free rate, which serves as a benchmark for the expected return, and the market risk premium, which is the difference between the expected return of the market and the risk-free rate. The stock's beta reflects the level of systematic risk associated with the stock, and the CAPM model uses this beta to adjust the expected return accordingly.

The _________________________ Develops a Model of the Return Needed to Own