Options
- A
Measures liquidity risk
-
Determines expected return of an asset based on risk-free rate, beta, and market risk premium
Correct answer
- C
Measures current ratio
- D
Evaluates project feasibility
Why this is the answer
CAPM calculates the expected return on an asset using the formula: Expected Return = Risk-Free Rate + Beta × (Market Return – Risk-Free Rate). It helps investors price risk and return.
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