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- In the context of the Capital Asset Pricing Model (CAPM), the relevant measure of risk is A. standard deviation of returns. B. beta. C. variance of returns. D. unique risk.What role does the correlation what role does the correlation of two assets play in computation of the expected return of the two asset portfolio ?Why doesn’t an estimated absolute covariance number tell the investor much about the relationship between the returns on the two assets?
- Illustrate the calculation of the standard deviation of returns?What is the standard deviation of asset M?1. How to compare different assets in investment selection process? 2. What are the quantitative characteristics of the assets and how to measure them? 3. How does one asset in the same portfolio influence the other one in the same portfolio? 4. And what could be the influence of this relationship to the investor’s portfolio? 5. What is relationship between the returns on an asset and returns in the whole market (market portfolio)?