Question
Why does required returns (as calculated by the CAPM) not always coincide with realized returns? Markets are inefficient Beta is estimated not observed Constructing the
Why does required returns (as calculated by the CAPM) not always coincide with realized returns?
Markets are inefficient
Beta is estimated not observed
Constructing the true market portfolio is difficult in practice
Investors are not mean-variance optimizers
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All of the provided options can contribute to the disparity between required returns as calculated b...
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Fundamentals of Financial Management
Authors: Eugene F. Brigham, Joel F. Houston
11th edition
324422870, 324422873, 978-0324302691
