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    CAPM model, compare standard deviation with expected return

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    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

    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.