The Capital Asset Pricing Model Is Given by R -

question 10

Multiple Choice

The capital asset pricing model is given by R - R_f = α + β(R_M - R_f) + ε, where R_M = expected return on the market, R_f = risk-free market return, and R = expected return on a stock or portfolio of interest. The explanatory variable in this model is ________.

• A) R
• B) R - R_f
• <sub
• C) _RM
• D) _RM - R_f

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