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According to the CAPM (Capital Asset Pricing Model) there is only one risk factor that affects the expected return on stocks: the risk factor is
According to the CAPM (Capital Asset Pricing Model) there is only one risk factor that affects the expected return on stocks: the risk factor is called beta. a. What is the beta of the market (for example SP500)? b. What is the beta of the risk free asset (for example Treasury bond)? a. Beta of the market = 1 b. Beta of the risk-free asset = 1 a. Beta of the market = 1 b. Beta of the risk-free asset = 0 a. Beta of the market = 0 b. Beta of the risk-free asset = 1 a. Beta of the market = 0 b. Beta of the risk-free asset = 0 a. Beta of the market = 1 b. Beta of the risk-free asset = doesn't exist since treasuries do not have risk
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