CAS Exam 9 Practice Questions - CAS Exam 9 Financial Risk And Rate Of Return Exam

In the Capital Asset Pricing Model (CAPM), the expected return on a security is best described as:

The risk-free rate plus a premium proportional to the security's total volatility The risk-free rate plus the security's beta times the market risk premium The market return plus the security's idiosyncratic risk premium The market risk premium times the security's correlation with inflation

Correct Answer:

The risk-free rate plus the security's beta times the market risk premium

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