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What is Understanding the Capital Asset Pricing Model about?
This chapter discusses the Capital Asset Pricing Model (CAPM). It states that under the CAPM assumptions, the market portfolio has the highest expected return for a given level of risk. It also discusses how leveraging the market portfolio can dominate other portfolios. The chapter provides examples of calculating expected returns and volatility of portfolios using the CAPM. It concludes by discussing limitations of empirical tests of the CAPM model.
- Author
- Juan Zuluaga
- Language
- EN