The basic tenet of the CAPM is that a stock's expected risk premium should be:

Question

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The CAPM suggests that a stock's expected risk premium should be proportionate to the stock's beta, which measures the sensitivity of the stock's returns to the overall market returns. This indicates that the expected risk premium increases as the beta of the stock increases, reflecting higher risk associated with the stock's dependence on the market. The CAPM does not necessarily suggest that the expected risk premium should be greater than the expected market return, proportional to the market risk premium, or greater than the risk-free rate of return.

The Basic Tenet of the CAPM Is That a Stock's