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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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