3 Questions
What is unsystematic risk also known as?
Non-diversifiable risk or market risk
What does the Beta value of a stock measure?
The measurement of volatility of a stock in comparison to the volatility of the market
What does a Beta value of 1 indicate in the CAPM model?
A stock’s return is equal to the market portfolio (index)
Test your knowledge of the Capital Asset Pricing Model (CAPM) theory developed by Sharpe and Lintner. Understand the relationship between an asset's risk and its expected return, as well as the calculation for expected rate of return using the risk-free rate and risk premium.
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