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      Question

      In CAPM, the risk-free rate

      is:
      A Variable rate deposit Correct Answer Incorrect Answer
      B Treasury bond rate Correct Answer Incorrect Answer
      C Corporate bond rate Correct Answer Incorrect Answer
      D Market return rate Correct Answer Incorrect Answer

      Solution

      Treasury securities are backed by the government, so they’re considered risk-free. CAPM uses this as a base to compute expected returns.

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