The Capital Asset Pricing Model (CAPM) Includes Which of the Following

question 61

Multiple Choice

The Capital Asset Pricing Model (CAPM) includes which of the following in its base assumptions?
I. Investors buying positive beta stocks should earn a minimum return equal to the risk-free rate.
II. Investors in the market should earn a return greater than the return on the overall market.
III. Investors should be rewarded for the amount of risk they assume.
IV. Investors should earn a return located above the Security Market Line.

• A) I and III only
• B) II and IV only
• C) I, II and III only
• D) I, III and IV only

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