The capital asset pricing model [blank].

Question

Quizplus · Accepted Answer

The capital asset pricing model (CAPM) provides a risk-return trade-off in which risk is measured in terms of beta, which represents the sensitivity of a security's returns to market returns. CAPM assumes that investors are rational and risk-averse, seeking the highest expected return for a given level of risk. The model calculates the expected return of a security based on the risk-free rate, the market risk premium, and the security's beta.

The Capital Asset Pricing Model [Blank]