The Basic Tenet of the CAPM Is That a Stock's

question 17

Multiple Choice

The basic tenet of the CAPM is that a stock's expected risk premium should be:

• A)greater than the expected market return.
• B)proportionate to the market risk premium.
• C)proportionate to the stock's Beta.
• D)greater than the risk-free rate of return.

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Definitions:

Unemployment Insurance Tax

A tax collected by the federal and state governments from employers to fund unemployment benefits for workers who have lost their jobs.

Administrative Costs

Expenses related to the general management and administration of an organization, as opposed to production or manufacturing costs.

Defined-Benefit Plans

Defined-benefit plans are retirement plans where an employer promises a specified monthly benefit upon retirement, which is calculated based on factors like salary history and duration of employment.

Freelancers

Independent professionals who offer their skills and services on a project or contract basis instead of being employed by a single company.