FREE Trial
Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I am studying CAPM and I discovered that they take E(return of market) - risk free rate as the risk premium. However, I remembered that

I am studying CAPM and I discovered that they take E(return of market) - risk free rate as the risk premium. However, I remembered that risk premium formula should be return of an asset - risk free rate , but not the expected value of the return of an asset - risk free rate. So why they will call it like that?

Thank you very much for the reply.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Management Science The Art Of Modeling With Spreadsheets

Management Science The Art Of Modeling With Spreadsheets

Authors: Stephen G. Powell, Kenneth R. Baker

3rd Edition

0470530677, 978-0470530672

More Books

Students also viewed these Finance questions

Question

★★★★★
1. If all the physicians are either hematologists or neurologists, then there are no cardiologists. But Dr. Frank is a cardiologist. Therefore, some physicians are not neurologists. (P, H, N, C) 2....

Answered: 1 week ago

Question

★★★★★
Define a recursive function that takes an integer argument and returns the factorial of that argument. Recall that 3 factorial, written 3!, equals 3 2!, and so on, with 0! defined as 1. In general,...

Answered: 1 week ago

Question

★★★★★
If for the events A and B we know that P(A) P(B) = 13, then P(A B) 13.

Answered: 1 week ago

Question

★★★★★
The internal control procedures in Phillips Company make the following provisions. Identify the principles of internal control that are being followed in each case. (a) Employees who have physical...

Answered: 1 week ago

Question

★★★★★
In this Java program, you are going to create a static, toy chatbot in Java. Assume your chatbot is responsible to direct the customer to a proper unit. After printing a greeting message, it should...

Answered: 1 week ago

Question

★★★★★
A. Imagine that cat owners have on average 3 cats with a standard deviation of 0.4 cats. What percent of owners have more than 4 cats? Find the z score first B. Imagine that cat owners have on...

Answered: 1 week ago

Question

★★★★★
What is the purpose of code of conduct will it impact at the goal decisions how will it be used by the organization and it\'s associates

Answered: 1 week ago

Question

★★★★★
Is there a common thread in the two situations of personal gain? What is different about the Gates scenario and those of the Birmingham officials?

Answered: 1 week ago

Question

★★★★★
To keep your production plant up and running, you are constantly looking for new employ- ees. Understanding the abilities of an applicant is not easy. By conducting an interview with an applicant,...

Answered: 1 week ago

Question

★★★★★
What is the profile of a hacker today? Characteristics Black hat White Hat State Sponsored Hackers Whistleblower Cybersecurity professionals (NYU, courses, degrees that specialize in cybersecurity,...

Answered: 1 week ago

Question

★★★★★
At a recent meeting, Nora observed that in her organization, the key values are intensely held and widely shared among all team members. What does this represent?

Answered: 1 week ago

Question

★★★★★
Please fill in the blank Points: U Of 1 The accompanying table describes results from groups of 10 births from 10 different sets of parents. The random variable x represents the number of girls among...

Answered: 1 week ago

Question

★★★★★
Making a decision to add or drop a product. The income statement for the Caldwell Manufacturing Company appears below. Management is concerned over the loss on Product C. Materials and labor are...

Answered: 1 week ago

Question

★★★★★
Making a decision to manufacture or buy. The Gonzalez Company is currently manufacturing a part. An outside supplier has offered to provide the part for $55 per unit. Cost data relating to production...

Answered: 1 week ago

Question

★★★★★
Making a decision about special pricing. The Brenner Company produces a part used in automobiles. Annual production is 200,000 units, each of which regularly sells for $100. The standard cost sheet...

Answered: 1 week ago

Previous Question Next Question