The Market Model differs from the CAPM in that the Market Model
A) uses a riskfree return.
B) uses the market portfolio.
C) uses a market index.
D) describes how prices are set.

Question

Quizplus · Accepted Answer

The Market Model uses a market index to explain the return of a security, unlike the CAPM which uses the market portfolio to explain asset prices and their relationship with risk and expected return.

The Market Model Differs from the CAPM in That the Market