Problem 1: The capital assets pricing model (CAPM) tells us that in an efficient and fair capital market, the expected return on an asset only depends on its:
a. Total risk.
b. Systematic risk.
c. Unsystematic risk.
d. No risk.
Problem 2: The CAPM shows that the expected return for a particular asset depends on the following factors except:
a. Market risk premium.
b. The pure time value of money.
c. The amount of unsystematic risk.
d. The amount of systematic risk.