The capital asset pricing model suggests that the required return on a firm's stock is a negative function of:
A) the risk-free rate of interest.
B) the market rate of return.
C) the stock's beta.
D) none of the above

Question

Quizplus · Accepted Answer

The capital asset pricing model (CAPM) indicates that the required return on a firm's stock is a positive function of the risk-free rate, the market rate of return, and the stock's beta, not a negative function.

The Capital Asset Pricing Model Suggests That the Required Return