The required rate of return for an asset is equal to the risk-free rate plus a risk premium.

Question

Quizplus · Accepted Answer

This statement is true according to the capital asset pricing model (CAPM). The required rate of return for an asset is calculated by taking the risk-free rate (usually the yield on government bonds) and adding a risk premium that accounts for the additional risk associated with the asset compared to a risk-free investment.

The Required Rate of Return for an Asset Is Equal