A Stock's Required Rate of Return as Determined by the Capital

question 103

Multiple Choice

A stock's required rate of return as determined by the capital asset pricing model is influenced by

• A) the risk-free rate.
• B) the expected return on the market.
• C) the standard deviation of past returns.
• D) A and B, but not C.

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Definitions:

Venture Capitalist

An investor who provides capital to start-up companies or supports small companies that wish to expand but do not have access to equities markets.

Finance Manager

A professional responsible for managing the financial health of an organization, including planning, organizing, controlling, and monitoring financial resources.

Borrower

An individual or organization that takes something, especially money, from another with the intention of returning it or its equivalent.

Angel Investor

An individual who provides capital to start-up companies in exchange for ownership equity or convertible debt.