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According to the CAPM, the expected return on a risky asset depends on three components. Describe each component, and explain its role in determining expected
According to the CAPM, the expected return on a risky asset depends on three components. Describe each component, and explain its role in determining expected return. What is the importance of each component and how could a change in each affect the output? What is Beta and why is it important? Explain the conceptual differences in the theoretical development of the CAPM and APT. Discuss the Fama-French three-factor model; both what it means and the factors of the model.
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