1. Compare and contrast CAPM and APT
Derive CAPM and APM CAPM: "The Capital Asset Pricing Model is an equilibrium model of asset pricing, it states that the expected return on a security is a positive linear function of the security's sensitivity to changes in the market portfolio's return." ... Therefore, the efficient set consists of a single straight line , emanating from the risk free point R and passing through the market portfolio M. This line RM is called capital market line ( CML ). ... This can be solved by capital asset pricing model .(1.) & (2.) (4. ) Since the market portfolio M is efficient , the expec...
- Word Count: 2530
- Approx Pages: 10
- Has Bibliography
- Grade Level: High School