Please financial accounting expert need your help In the Capital Asset Pricing Model (CAPM), what does betameasure?A) The systematic risk of an asset relative to the marketB) The expected return of the marketC) The risk-free rate of returnD) The unsystematic risk of an asset

Concept of Beta in CAPM: Beta is a measure of an asset's sensitivity to market movements and…

Answered: In the Capital Asset Pricing Model…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter3: Risk And Return: Part Ii

Section: Chapter Questions

Problem 8MC

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Similar questions

What does beta measure?
The Capital Asset Pricing Model (CAPM) asserts that an asset’s expected return is equal to the risk-free rate plus a risk premium for: a. Volatility b. Systematic risk c. Non-systematic risk d. Diversification e. Marginal utility of consumption
The capital asset pricing model expresses the cost of equity as a function of a return on riskless assets, a market premium, and: Select one:a. Unsystematic risk.b. None of these.c. The cost of debt.d. Systematic risk.
Capital asset pricing theory asserts that portfolio returns are best explained by:a. Economic factors.b. Specific risk.c. Systematic risk.d. Diversification.
In the capital asset pricing model, the general risk preferences of investors in the marketplace are reflected by ________. the level of the security market line the slope of the security market line the difference between the beta and the risk-free rate the risk-free rate
According to the capital asset pricing model, assets with Lower; lower; unsystematic Higher; higher, unsystematic Lower; higher; unsystematic Higher; higher; systematic Higher; lower; systematic betas have expected returns because betas quantify the degree of risk. Please fill in the blank.
How does the capital asset pricing model (CAPM) influence financial decisions regarding risk and return?
What is relationship between the returns on an asset and returns in the whole market (market portfolio)?
Describe the capital asset pricing model and explain the role of beta as a risk measurement tool.
In the context of the Capital Asset Pricing Model (CAPM), the relevant measure of risk is A. standard deviation of returns. B. beta. C. variance of returns. D. unique risk.
Which of the following is the correct equation of the capital asset pricing model (CAPM)? (E(Ri) denotes the expected return on a security, Rf denotes the risk-free rate, [E(RM) − Rf] denotes the market risk premium, and βi denotes the amount of systematic risk present in the security.) Multiple choice question. E(Ri) = Rf + [E(RM) – Rf] × βi E(Ri) = Rf – [E(RM) + Rf] × βi E(Ri) = Rf – [E(RM) – Rf] × βi E(Ri) = Rf + [Rf− E(RM)] × βi
Regarding the Security Market Line (SML) and the Capital Asset Pricing Model (CAPM): If the expected return is less than the required return estimated with the CAPM, the expected return will plot below the SML and the asset is considered to be overpriced If the expected return is greater than the required return estimated with the CAPM, the expected return will plot above the SML and the asset is considered to be underpriced If the expected return is greater than the required return estimated with the CAPM, the expected return will plot below the SML and the asset is considered to be overpriced If the expected return is less than the required return estimated with the CAPM, the expected return will plot above the SML and the asset is considered to be underpriced

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In the Capital Asset Pricing Model (CAPM), what does beta measure? A) The systematic risk of an asset relative to the market B) The expected return of the market C) The risk-free rate of return D) The unsystematic risk of an asset