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07-08-2020
Business

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Which of the following is most correct according to the CAPM: Group of answer choices A stock’s risk premium depends on its beta. Company specific risk is the most relevant risk. A stock’s risk premium depends on its firm-specific risk. There is a linear and positive relationship between a stock’s total risk and its required return.

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topeadeniran2 topeadeniran2

08-08-2020

Answer: A stock’s risk premium depends on its beta

Explanation:

The Capital Asset Pricing Model (CAPM) helps in knowing the relationship that exists between the systematic risk and return whihc an individual or a firm expects for an assets, such as stocks.

It should be noted that the beta influences the return. Therefore, stock’s risk premium depends on its beta.

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