In the ____, the expected return on a security is equal to the risk-free rate plus a single risk premium that is equal to the product of the expected rate of return on the market portfolio less the risk-free rate times the sensitivity of the security's returns to the market return.
A) Arbitrage Pricing Theory
B) Capital Asset Pricing Model
C) Dividend Valuation Model
D) Risk premium on debt model

Question

Quizplus · Accepted Answer

The description provided matches the Capital Asset Pricing Model (CAPM), which is commonly used to estimate the expected return on an asset or security by considering its sensitivity to market risk.

In the ____, the Expected Return on a Security Is