The ____ is commonly used to determine what a stock's price should have been.

Question

Quizplus · Accepted Answer

The Capital Asset Pricing Model (CAPM) is commonly used to determine what a stock's price should have been. The CAPM takes into account the risk-free rate, the expected return of the market, and the stock's beta to estimate the required return on the stock, which is then used to calculate its fair value. The Treynor Index and Sharpe Index are both measures of risk-adjusted return and do not directly determine a stock's fair value.

The ____ Is Commonly Used to Determine What a Stock's