The following stock price information has been collected for stock XYZ: End of year Closing price 2023 $127 2022 $119 2021 $123 2020 $118 $121 2019 XYZ has a correlation with the market portfolio of 0.60. The S&P 500 market portfolio has a standard deviation of 20%. What is the standard deviation for XYZ over the sample period? 3.57% 7.81% None are correct 4.93%
Risk and return
Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary.
Capital Asset Pricing Model
Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.
The following stock price information has been collected for stock XYZ: \table[[End of year,Closing price],[2023,$127
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