The Capital Asset Pricing Model Is Given by R -

question 48

Multiple Choice

The capital asset pricing model is given by R - R_F = α + β(R_M - R_f) + ε,where R_M = expected return on the market,R_f = risk-free market return,and R = expected return on a stock or portfolio of interest.The response variable in this model is ________.

• A) R
• B) R - R_f
• C) R_M
• D) R_M - R_f

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Definitions:

Transfer Payments

Payments made by the government to individuals or organizations without requiring the recipient to provide goods or services in return, such as welfare or subsidies.

Property Income

Earnings from property ownership, including rent, dividends, and interest.

Gini Coefficient

A commonly used measure of the degree of inequality of income derived from a Lorenz curve. It can range from 0 to a maximum of 1.

Lorenz Curve

A graphical representation of the distribution of income or wealth within a society, showcasing the degree of inequality.