According to the capital asset pricing model, fairly priced securities have ________.
A) negative betas
B) positive alphas
C) positive betas
D) zero alphas

Question

Quizplus · Accepted Answer

According to the Capital Asset Pricing Model (CAPM), fairly priced securities have zero alphas. Alpha represents the abnormal rate of return on a security, relative to the expected return predicted by CAPM. A zero alpha indicates that the security is performing exactly as expected, given its risk (beta), and is therefore fairly priced.

According to the Capital Asset Pricing Model, Fairly Priced Securities