Asked by
Deena Alawdi
on Oct 20, 2024
Verified
According to the CAPM, investors are compensated for all but which of the following?
A) expected inflation
B) systematic risk
C) time value of money
D) residual risk
CAPM
CAPM, or the Capital Asset Pricing Model, is a formula that describes the relationship between the expected return of an investment and market risk.
Expected Inflation
The anticipated rate at which the general level of prices for goods and services will rise over a period of time.
Systematic Risk
The risk inherent to the entire market or market segment, often referred to as market risk.
- Understand the basic principles and consequences of the Capital Asset Pricing Model (CAPM).
- Recognize and elucidate the metrics for risk assessment such as variance, beta, and alpha.
Verified Answer
SB
Learning Objectives
- Understand the basic principles and consequences of the Capital Asset Pricing Model (CAPM).
- Recognize and elucidate the metrics for risk assessment such as variance, beta, and alpha.