Question
Which of the following statements is false? Group of answer choices One key result of applying the Capital Asset Pricing Model is that the risk
Which of the following statements is false? Group of answer choices One key result of applying the Capital Asset Pricing Model is that the risk and return of an individual security should be analyzed by how that security affects the risk and return of the portfolio in which it is held. According to the Capital Asset Pricing Model, investors are primarily concerned with portfolio risk, not the isolated risks of individual stocks. Thus, the relevant risk is an individual stocks contribution to the overall riskiness of the portfolio. Betas can be estimated by running a regression between the market returns and the security returns. Betas are constant and never change. Any change in beta is likely to affect the required rate of return on a security which implies that a change in beta will likely have an impact on the security's price.
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