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Portfolio M is the market portfolio, and Rf is the risk-free rate. According to CAPM, would anyone hold security B by itself? a, No, it
Portfolio M is the market portfolio, and Rf is the risk-free rate. According to CAPM, would anyone hold security B by itself?
a, No, it would be inefficient to hold B by itself, since you can hold the market and earn the same expected return while incurring smaller volatility.
b. Yes, somone who prefers high-volatility stocks would hold B by itself.
c. Insufficient information
Exp. Ret. M B A C Rf Standard DeviationStep by Step Solution
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