Ctrl 30. Which of the following are true statements about the Capital Asset Pric

Question

Ctrl 30. Which of the following are true statements about the Capital Asset Pricing Model (CAPM)? 1. The Capital Market Line (CML) by itself does NOT determine the timal portfolio for an investor. 2 Beta is used as a measure of risk on the Security Market Line (SML) The required return is. Detat?mes-the-market return 4. As investors substitute risky securities for risk-free assets, both risk and return increase. a. 1 and 3 b. 2 and 4. c. 1, 2, and 4. d. 2, 3, and 4 Answer: ged n the CAPM, what return should Jordan expect from a securi

Explanation / Answer

Answer - C

CAPM - Rf + beta( Rm - Rf )

As beta measure risk for the portfolio

CAPM model is used to calculate required rate of return of an asset so that an investor can add that asset in portfolio

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