medium · Principles of Finance risk-return-portfolio
When using the Capital Asset Pricing Model (CAPM) to find the required return on a stock, which of the following best describes the 'Market Risk Premium'?
- The beta of the stock multiplied by the market's return.
- The total standard deviation of the market portfolio.
- The yield on a long-term government bond.
- The expected return on the market portfolio minus the risk-free rate.
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