In the Equation K_j = R_f + ß_j (R_m -

question 90

Multiple Choice

In the equation K_j = R_f + ß_j (R_m - R_f) ,

• A) beta (ß_j) is the stock's measure of volatility relative to the market.
• B) R_m - R_f is the premium or excess return of the market versus the risk free rate.
• C) ß_j (R_m - R_f) is the expected return above the risk-free rate for the stock of company j.
• D) all of the other answers are correct

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