alleryStart learning →In the CAPM equation, Rf stands for the:
AReturn on fixed assets
BRate of future inflation
CRisk-free rate of return
DRealised firm revenue
Answer & Solution
Correct answer: C. Risk-free rate of return
1. The symbols are defined together.
2. Re is the expected return of the asset.
3. Rf is the risk-free rate of return.
4. Rm is the expected return of the market.
_Source: OpenStax Principles of Finance (CC BY 4.0), Ch 15 'Risk, Return, and Capital Market Theory'_
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