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What is Systematic vs. Unsystematic Risk Explained about?

CAPM is not a perfect model and has several limitations: 1) It assumes returns are normally distributed when they are often not. 2) It uses variance as the only measure of risk which may not fully capture risk. 3) It assumes homogeneous investor expectations which is often not true. 4) Empirical studies show it does not fully explain variations in stock returns. While imperfect, CAPM provides a basic framework for understanding systematic and unsystematic risk and the relationship between risk and r

Author

Dilipk86

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EN