The CAPM Expected Rate of Return Is Equal to the

question 45

Multiple Choice

The CAPM expected rate of return is equal to the

• A)time premium plus the default premium.
• B)default premium plus the expected risk premium.
• C)time premium plus the expected risk premium.
• D)time premium plus the default premium plus the expected risk premium.

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Definitions:

Operating Activities

Business activities directly related to the production, sale, and delivery of a company's products or services, generating the majority of its revenue and expenses.

Cash Dividends

Cash dividends are payments made by a corporation to its shareholders, usually as a distribution of profits.

Free Cash Flow

A measure of financial performance calculated as operating cash flow minus capital expenditures, representing the cash that a company is able to generate after spending the money required to maintain or expand its asset base.

Capital Expenditures

Funds used by a company to acquire, upgrade, and maintain physical assets such as property, plants, buildings, technology, or equipment.