Under CAPM formula, required return = Risk-free rate + β×

Under CAPM formula, required return = Risk-free rate + β×

Under CAPM formula, required return = Risk-free rate + β×?

A. Market risk premium

B. Company specific default premium

C. Inflation premium only

D. Liquidity risk premium

Answer: A

Rationale: CAPM: Re=Rf+β×(Rm-Rf), (Rm-Rf)=market risk premium.