Explore BrainMass

Explore BrainMass

    CAPM model, compare standard deviation with expected return

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Is the following statement True, False, or Ambiguous? Provide a short justification for your
    answer (you are evaluated on the justification).

    "In the CAPM model, since investors are compensated for holding risk, two securities with the same standard deviation should have the same expected return."

    © BrainMass Inc. brainmass.com June 3, 2020, 9:54 pm ad1c9bdddf
    https://brainmass.com/business/capital-asset-pricing-model/capm-model-compare-standard-deviation-with-expected-return-205178

    Solution Preview

    False. CAPM is applicable when we are picking securities for building portfolio. It considers Beta as ...

    Solution Summary

    Answers a conceptual question on CAPM.

    $2.19

    ADVERTISEMENT