According to the Capital Asset Pricing Model,the Expected Return on a Security

question 60

Multiple Choice

According to the capital asset pricing model,the expected return on a security is

• A)negatively and linearly related to the security's beta.
• B)positively and linearly related to the security's beta.
• C)positively and nonlinearly related to the security's beta.
• D)positively and linearly related to the security's variance.
• E)negatively and nonlinearly related to the security's beta.

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Definitions:

Standard Deviation

An index quantifying how data varies in relation to the average, representing the range of data dispersal.

Normally Distributed

A statistical term describing data that follows a bell curve pattern, where most observations fall around the mean, and probabilities for values decrease as they move away from the mean.

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, indicating how much the values deviate from the mean.

Mean Age

The mean age of a specific group or population, determined by adding together the ages of all members and then dividing by the total number of members.