19. According to CAPM, if the expected return on asset 1, E(R1),
is greater than the expected return on asset 2, E(R2), then:
A) beta for asset 1 must be greater than beta for asset 2 B)
market risk premium for asset 1 must be greater than market risk
premium for asset 2 C) observed returns for asset 1 (R1) must
always be greater than observed returns for asset 2 (R2) D)
volatility of asset 1 return (σ1) must be greater than asset 2
return volatility (σ2) E) reward-to-risk ratio for asset 1 must be
greater than reward-to-risk ratio for asset 2
19. According to CAPM, if the expected return on asset 1, E(R1), is greater than the expected return on asset 2, E(R2),
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