Now that you have read about the CAPM, would you ever use it to make personal investment decisions?
Note: the main message of the CAPM is the notion of diversification of investments. At least theoretically investors should only invest in two portfolios: one is the Market Portfolio (such as the S&P500 Index) and the other is a portfolio of short term or money market default-free securities.© BrainMass Inc. brainmass.com June 4, 2020, 2:08 am ad1c9bdddf
Beta is a key component for the capital asset pricing model (CAPM). I would never use it to make personal investment decision because beta is calculated based on data from the past or historical data. Beta does not ...