Based on CAPM, the expected return on a stock is affected by the
A) Stock's beta
B) Market return
C) Risk-free rate
D) All of the above
E) None of the above

Question

Quizplus · Accepted Answer

According to the Capital Asset Pricing Model (CAPM), the expected return on a stock is determined by the stock's beta (systematic risk), the market return as a whole, and the risk-free rate (opportunity cost). Therefore, all of the options A, B, and C influence the expected return on a stock, making D the correct choice.

Based on CAPM, the Expected Return on a Stock Is