According to the CAPM,the Expected Return on a Risky Asset

question 1

Essay

According to the CAPM,the expected return on a risky asset depends on three components.Describe each component,and explain its role in determining expected return.

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Definitions:

Working Capital

The difference between a company's current assets and its current liabilities, indicating short-term financial health.

Capital Cost Allowance

A tax deduction in Canada allowing for the depreciation of capital assets to be deducted from income.

Tax Rate

The tax rate is the percentage at which an individual or corporation is taxed by the government on income or profits.

Class 43

Class 43 is a category used in certain tax systems for specific types of assets that qualify for accelerated depreciation, often related to clean energy or energy-efficient equipment.