Question
Book Icon
Chapter 13, Problem 8P
Summary Introduction

To determine: The reasons that supports that the investors should trade very rarely as per CAPM.

Introduction: CAPM is abbreviated as Capital Asset Pricing Model. Expected return is the method of finding the average anticipated probability of several diverse interest rates that are probable on a particular asset. The issues in such persistence comprise of dissimilar market environments, which also includes the beta of an asset. Beta is a numerical assessment that evaluates the variations of a stock to fluctuations in the total stock market. Risk-free rate is the optimal rate on an investment that can be attained deprived of acquiring any risk whereby the stockholder is guaranteed of getting both the original principal and a marginal profit during the specified time period. Market risk premium is estimated by initially discovering the expected return of an asset or a portfolio.

Blurred answer
Students have asked these similar questions
Dont answer i will unhelpful with incorrect values . please comment i will write values.
What is corporate finance? explain the part of finance.
Pfizer Pharmecuticals has a $21,000 par value bond outstanding that pays 10 percent annual interest. The current yield to maturity on such bonds in the market is 13 percent. Compute the price of the bonds for the following maturity dates:  a. 30 years b. 15 years

Chapter 13 Solutions

Corporate Finance Plus MyLab Finance with Pearson eText -- Access Card Package (4th Edition) (Berk, DeMarzo & Harford, The Corporate Finance Series)

Knowledge Booster
Background pattern image
Similar questions
SEE MORE QUESTIONS
Recommended textbooks for you
Text book image
International Financial Management
Finance
ISBN:9780357130698
Author:Madura
Publisher:Cengage
Text book image
Business/Professional Ethics Directors/Executives...
Accounting
ISBN:9781337485913
Author:BROOKS
Publisher:Cengage
Text book image
Intermediate Financial Management (MindTap Course...
Finance
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Cengage Learning