Question
Which of the following variables is not required to calculate the expected return on a risky asset?
Multiple choice question.
The stock's beta
The market risk premium
The risk-free rate
The rate of inflation
Multiple choice question.
The stock's beta
The market risk premium
The risk-free rate
The rate of inflation
Answers
GPT-4o mini
The variable that is not required to calculate the expected return on a risky asset is **the rate of inflation**.
The expected return on a risky asset is typically calculated using the Capital Asset Pricing Model (CAPM), which requires the stock's beta, the market risk premium, and the risk-free rate. The rate of inflation does not directly factor into the CAPM formula for expected return.
The expected return on a risky asset is typically calculated using the Capital Asset Pricing Model (CAPM), which requires the stock's beta, the market risk premium, and the risk-free rate. The rate of inflation does not directly factor into the CAPM formula for expected return.