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False. According to the CAPM model, the expected rate of return for security b does not necessarily have to be higher than security a. The expected rate of return for each security is determined by its level of risk, which is reflected in the standard deviation of its return.
The Relationship between Risk and Expected Rate of Return in the CAPM Model
The capm model posits that the expected rate of return for a security is determined by its level of risk. This risk is reflected in the standard deviation of the security's return. Therefore, if security a has a standard deviation of 15 and security b has a standard deviation of 25, the expected rate of return for security b does not necessarily have to be higher than security a.
Learn more about the CAPM Model: https://brainly.com/question/17219340
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