The conventional or domestic CAPM postulates that the expected return on an asset or a portfolio is:

Question

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The Capital Asset Pricing Model (CAPM) posits that the expected return on an asset or portfolio is positively related to its systematic risk (beta), which is the risk inherent to the entire market or market segment that cannot be mitigated through diversification. Unsystematic risk, which can be diversified away, does not affect expected returns in the CAPM framework.

The Conventional or Domestic CAPM Postulates That the Expected Return