Assume That the CAPM Holds

question 75

Multiple Choice

Assume that the CAPM holds.If a security has a beta of 1,its expected return is:

• A) the risk-free rate
• B) 1 percent
• C) the return on the market portfolio
• D) cannot be determined with the above information

---

Definitions:

Intervening Variable

A concept that helps explain the relationship between the independent and dependent variables in an experiment or study.

Laboratory Rats

Rats used in scientific research as models to study human physiology, psychology, disease processes, and the effects of substances.

Motivation

The psychological process that initiates, guides, and maintains goal-oriented behaviors, involving the biological, emotional, social, and cognitive forces that act on or within an individual.

Nomothetic Approach

A research approach focusing on general laws that apply to large populations, emphasizing common characteristics among individuals rather than uniqueness.