Which of the Following Is the Correct CAPM Equation Used $\beta$

question 3

Multiple Choice

Which of the following is the correct CAPM equation used to determine the expected returns (r) of financial assets? (RM is the mean return of the market portfolio,r_f is the risk-free rate,and $\beta$ is the beta computed against the return of the market portfolio.)

• A)r = \(\beta\) (R_M - r_f)- r_f
• B)r = r_f - \(\beta\) (R_M - r_f)
• C)r = r_f - \(\beta\) (R_M + r_f)
• D)r = r_f + \(\beta\) (R_M - r_f)

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Ingroup

A social group to which a person psychologically identifies as being a member, often leading to favoritism towards ingroup members and prejudice against outgroup members.

Outgroup

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A theory that attributes the development and behaviors of organisms to evolutionary factors such as natural selection.

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The degree to which a person's physical traits are considered aesthetically pleasing or beautiful.