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

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The Answer is The CAPM suggests that the expected return is a function of (1)the risk-free rate of return,which is the pure time value of money, (2)the market risk premium,which is the reward for bearing systematic risk,and (3)beta,which is the amount of systematic risk present in a particular asset.Better answers will point out that both the pure time value of money and the reward for bearing systematic risk are exogenously determined and can change on a daily basis,while the amount of systematic risk for a particular asset is determined by the firm's decision-makers.

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

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

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Correct Answer:VerifiedShow Answer

Correct Answer:
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