Question
1. Suppose investors believe that the standard deviation of the market-index portfolio has increased by 50%. Speculate on two potential implications of the Security Market
1. Suppose investors believe that the standard deviation of the market-index portfolio has increased by 50%. Speculate on two potential implications of the Security Market Line (SML) and CAPM regarding the effect of this change on the required rate of return for a company's investment projects.
2. compare the returns of the two selected funds for the past 10 years. Determine whether you believe that the Fama-French (FF) three-factor model should or should not be rejected. Explain why or why not.
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Foundations of Finance The Logic and Practice of Financial Management
Authors: Arthur J. Keown, John D. Martin, J. William Petty
8th edition
132994879, 978-0132994873
