Chapter6: Risk And Return
Section: Chapter Questions
Problem 1Q
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Question
M2
Transcribed Image Text:Link Prospect Theory, the average investor risk
aversion coefficient (i.e., A), and the CAPM risk
premium. In addition, comment on the long-term
path of the CAPM risk premium (for example, is it
time varying, stable, downward trending, etc.) as
well as its size relative to the empirical
recommendations (think equity risk premium
puzzle)?
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