According to the CAPM how is the risk premium on an individual security calculated?
What will be an ideal response?
Answer: The CAPM implies that the expected return of any security equals the risk-free rate plus the beta of the security multiplied by the market risk premium. The beta of the security is the covariance of its return with the return on the market portfolio divided by the variance of the market portfolio return. Hence, the risk premium on an individual security is a function of its covariance with the market portfolio.
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Describe the three possible relationships among perceived value, price and cost, ignoring competition for the present
What will be an ideal response?
According to the text, buyer behavior is a central component of the environmental context of the problem
Indicate whether the statement is true or false