According to the Capital Asset Pricing Model (CAPM), underpriced securities have ___________ Group of answer choices a. positive betas. b. zero alphas. c. negative betas. d. positive alphas.
According to the Capital Asset Pricing Model (CAPM), underpriced securities have ___________ Group of answer choices a. positive betas. b. zero alphas. c. negative betas. d. positive alphas.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
According to the
Group of answer choices
a. positive betas.
b. zero alphas.
c. negative betas.
d. positive alphas.
Expert Solution
Step 1: Introduction to Capital Asset Pricing Model (CAPM):
The Capital Asset Pricing Model (CAPM) is a widely accepted financial framework used to determine the expected return on an investment. It is based on the idea that investors are compensated for two main types of risk when investing in securities: systematic risk and unsystematic risk. Systematic risk, often referred to as beta, is associated with the overall market movements. Unsystematic risk, known as alpha, is specific to an individual security.
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