According to the CAPM, What Is the Expected Market Return

question 36

Multiple Choice

According to the CAPM, what is the expected market return given an expected return on a security of 15.8%, a stock beta of 1.2, and a risk-free interest rate of 5%?

• A) 5%
• B) 9%
• C) 13%
• D) 14%

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Definitions:

Q Falls

Indicates a decrease in the quantity demanded or supplied of a good or service, often in response to changes in price, income, or other factors.

GDP

Gross Domestic Product, the total market value of all final goods and services produced within a country in a given period.

Stock of Money

The total quantity of money available within an economy at a specific time, including cash, bank deposits, and liquid financial instruments.

Velocity of Circulation

The rate at which money is exchanged from one transaction to another, and how much a unit of currency is used in a given period.