According to the CAPM, the risk premium an investor expects to receive on any stock or portfolio increases:
A) directly with alpha.
B) inversely with alpha.
C) directly with beta.
D) inversely with beta.
E) in proportion to its standard deviation.
C

Question

09-12-2022
Business

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According to the CAPM, the risk premium an investor expects to receive on any stock or portfolio increases:
A) directly with alpha.
B) inversely with alpha.
C) directly with beta.
D) inversely with beta.
E) in proportion to its standard deviation.
C

Respuesta :

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SidHussain SidHussain · Answer 1 · 2022-12-15T15:04:47+01:00

According to the CAPM, the risk premium an investor expects to receive on any stock or portfolio increases C) directly with beta.

In the field of business, the risk free revenue that is expected to be returned from an investment is referred to as the risk premium. This risk free premium is expected to increase directly with the beta. This is because the stock or portfolio increases directly with the beta.

A risk premium is a measure of excess return that is required by an individual to compensate being subjected to an increased level of risk. It is used widely in finance and economics, the general definition being the expected risky return less the risk-free return, as demonstrated by the formula below.

To learn more about risk, click here:

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According to the CAPM, the risk premium an investor expects to receive on any stock or portfolio increases: A) directly with alpha. B) inversely with alpha. C) directly with beta. D) inversely with beta. E) in proportion to its standard deviation. C

Respuesta :

Otras preguntas

According to the CAPM, the risk premium an investor expects to receive on any stock or portfolio increases:
A) directly with alpha.
B) inversely with alpha.
C) directly with beta.
D) inversely with beta.
E) in proportion to its standard deviation.
C