alleryStart learning →In the CAPM equation, Re stands for the expected return of the:
ABroker
BAsset
CMarket
DBond
Answer & Solution
Correct answer: B. Asset
1. Each symbol in the equation has a defined meaning.
2. The CAPM equation has three named quantities.
3. Re is the expected return of the asset.
4. Rf and Rm are the other two.
_Source: OpenStax Principles of Finance (CC BY 4.0), Ch 15 'Risk, Return, and Capital Market Theory'_
Keep practising Risk and Return
Browse all Risk and Return questions for US CMA Part 2, or explore more Finance topics.
Related questions
Complete the risk rulesMatch each risk termStack the risk termsSort the CAPM symbolsPull the rope to the right riskAn investor holding one stock rather than many is most exposed to which avoidable risk?Under CAPM, an asset with higher systematic risk should offer an expected return that is:Beta is relevant to investors because it measures the risk that is: