According to the Capital Asset Pricing Model (CAPM), Which of the Following

question 80

Multiple Choice

According to the capital asset pricing model (CAPM) , which of the following is NOT relevant to the required return for a firm's equity?

• A)The standard deviation of returns for the firm's equity.
• B)The risk-free rate.
• C)The market return on a diversified equity portfolio.
• D)The beta of the share.
• E)All of these are relevant.

---

Definitions:

Collateralized

Secured by an asset or property as a guarantee to repay a loan.

Amortized

The process of gradually reducing a debt through regular payments over time, which include both principal and interest components.

Borrower Defaults

Borrower defaults occur when a borrower fails to meet the legal obligations of a loan, such as not making scheduled payments.

Legal Documents

Written instruments that express rights, duties, entitlements, or liabilities legally enforceable by judicial action.