If the CAPM Is Used to Estimate the Cost of Equity

question 10

Multiple Choice

If the CAPM is used to estimate the cost of equity capital,the expected excess market return is equal to the:

• A) return on the stock minus the risk-free rate.
• B) difference between the return on the market and the risk-free rate.
• C) beta times the market risk premium.
• D) beta times the risk-free rate.
• E) market rate of return.

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