Which one of the following is the formula that explains the relationship between the expected return on a security and the level of that security's systematic risk?
A)capital asset pricing model
B)time value of money equation
C)unsystematic risk equation
D)market performance equation
E)expected risk formula

Question

Quizplus · Accepted Answer

The formula that explains the relationship between the expected return on a security and the level of that security's systematic risk is called Capital Asset Pricing Model (CAPM). It is used to calculate the expected return on an investment by taking into account the risk-free rate of return, the expected market return, and the beta coefficient, which measures the systematic risk of the security.

Which One of the Following Is the Formula That Explains