The capital asset pricing model (CAPM) is based on the premise that: Group of answer choices Neither systematic nor unsystematic

Question

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The capital asset pricing model (CAPM) is based on the premise that: Group of answer choices Neither systematic nor unsystematic

variability in cash flows is relevant. Only systematic variability in cash flows is relevant. Only unsystematic variability in cash flows is relevant. Both systematic and unsystematic variability in cash flows are relevant.

Business

1 answer:

Dahasolnce [82] · Answer 1 · 2022-04-27T00:16:17+03:00

Answer:

only systematic variability in cash flows is relevant.

Explanation:

A capital asset pricing model is a model that is used for determining the theoretically appropriate required rate of return for an asset, and to make the decisions about the adding assets to a well-diversified portfolio. It is the relationship between the systematic risk and the expected return for the assets. It is based on the premises that the only systematic variability in the cash flows is very relevant.