The Capital Asset Pricing Model Suggests That the Required Return

question 24

Multiple Choice

The capital asset pricing model suggests that the required return on a firm's stock is a positive function of:

• A) the risk-free rate of interest.
• B) the market rate of return.
• C) the stock's beta.
• D) All of these are correct.

---

Definitions:

Merit Pay Plans

Employee compensation plans designed to reward workers based on their performance and contributions to an organization.

Risky Behaviour

Actions undertaken by individuals or organizations that expose them to potential harm or significant loss.

Bonuses

Additional compensation given to employees as a reward for their performance or for meeting certain objectives.

Cost Reduction

Cost reduction involves strategies and actions taken to decrease expenses and improve efficiency in a business or operation, enhancing overall profitability.