FRM Part I Practice Questions - Financial Risk Manager Part I Exam

In the Capital Asset Pricing Model (CAPM), the market risk premium is defined as:

The difference between the risk-free rate and the market return The difference between the expected market return and the risk-free rate The covariance between the asset and the market divided by market variance The excess return of the asset over the risk-free rate

Correct Answer:

The difference between the expected market return and the risk-free rate

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