GENERAL KNOWLEDGE

Detailed explanation-1: -The Capital Asset Pricing Model (CAPM) describes the relationship between systematic risk, or the general perils of investing, and expected return for assets, particularly stocks.1 It is a finance model that establishes a linear relationship between the required return on an investment and risk.

Detailed explanation-2: -The Capital Asset Pricing Model (CAPM) describes the relationship between systematic risk and expected return for assets, particularly stocks. CAPM is widely used throughout finance for pricing risky securities and generating expected returns for assets given the risk of those assets and cost of capital.

Detailed explanation-3: -The security market line (SML) is a line drawn on a chart that serves as a graphical representation of the capital asset pricing model (CAPM). The SML can help to determine whether an investment product would offer a favorable expected return compared to its level of risk.

Detailed explanation-4: -CAPM Definition Systemic risk includes risk from interest rates, exchange rates, and inflation. Systemic risk is also caused by the fact that prices on the market tend to move together-if the market as a whole is doing well, even share prices for less-than-perfect companies typically do well.