Question

When working with the CAPM, which of the following factors can be determined with the most precision?a. The beta coefficient, bi, of a relatively safe stock.b. The most appropriate risk-free rate, rRF.c. The expected rate of return on the market, rM.d. The beta coefficient of "the market," which is the same as the beta of an average stock.e. The market risk premium (RPM).

Answer 1

Answer:

c. The expected rate of return on the market rM

Explanation:

The correct option is c. The expected rate of return on the market rM

* The expected market return is the return the investor would expect to receive from a broad stock market indicator such as the S&P 500 Index.