What is the pricing model that describes the expected return as the sum of the risk-free rate of interest and a premium for bearing market risk?
A) Fama-French model
B) Economic value added
C) Arbitrage pricing theory
D) Capital asset pricing model

Question

Quizplus · Accepted Answer

The Capital Asset Pricing Model (CAPM) describes the expected return on an investment as the sum of the risk-free rate of interest plus a premium for bearing market risk. This model is used to estimate the expected return on an asset based on its beta, which measures its sensitivity to market movements.

What Is the Pricing Model That Describes the Expected Return