The components of CAPM that are most sensitive to inflation are the risk-free rate and market rate

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The components of CAPM that are most sensitive to inflation are the risk-free rate and market rate of return. Can you suggest how CAPM can be used to capture expected changes to the return to a stock due to changes in inflation?

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Macroeconomics Principles Applications and Tools

ISBN: 978-0134420684

9th edition

Authors: Arthur O'Sullivan, Steven Sheffrin, Stephen Perez

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Posted Date: Apr 03, 2024 03:06 AM

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The components of CAPM that are most sensitive to inflation are the risk-free rate and market rate

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Expert Answer:

Certainly The Capital Asset Pricing Model CAPM can be used to capture expected changes to the return to a stock due to changes in inflation by adjusti... View the full answer

Macroeconomics Principles Applications and Tools

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