CAPM

You will need to figure out your company's beta for the presentation

Last class we covered returns on a stock. Which ones did we talk about?

If beta is 1.6, the Rrf is 3% and Rm is 8%, the required rate of return for this stock is:

A stock's beta will never change

CAPM is a method used in analysing the relationship between

Why do I teach you CAPM?

Which one of these are not ways that we measure risk for a stock?

A stock's beta measures its diversifiable risk relative to the diversifiable risks of other firms.

Which one of these are NOT items used in the Capital Asset Pricing Model?

A smart investor is not one who

CAPM assumes we do not have a diversified portfolio

"Risk aversion" implies that investors require higher expected returns on riskier than on less risky securities.

Beta is (in finance terms)

CAPM is also used for

According to the CAPM:

What kind of risk might we take that is NOT compensated by the market (assuming it's rational and efficient)?

Which one of these is the correct formula for required rate of return in CAPM?

Beta measures how a stock price moves in relation to the rest of the market

If a stock's actual rate of return is greater than the required rate of return, we should

You will have to run a linear regression between market rates of return and your stock to find beta

If a stock's actual rate of return is LOWER than the required rate of return, we should