Question
Assume V and W are individual stocks correctly priced in CAPM equilibrium, with but . E(r V ) > E(r W ) because V has
Assume V and W are individual stocks correctly priced in CAPM equilibrium, with but .
| E(rV) > E(rW) because V has more firm-specific risk than W. | ||
| E(rV) = E(rW) even though V has more total risk than W. | ||
| It is possible E(rV) < E(rW) because investors ignore total risk in CAPM equilibrium |
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Auditing Cases An Active Learning Approach
Authors: Mark S. Beasley, Frank A. Buckless, Steven M. Glover, Douglas F. Prawitt
2nd Edition
0130674842, 978-0130674845
