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In the CAPM equation, Rm stands for the expected return of the:
AManager
BMortgage
CMachine
DMarket
Answer & Solution
Correct answer: D. Market
1. The third symbol refers to the whole market.
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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