Explain why the market portfolio is efficient according to the CAPM.

Question:

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Corporate Finance

ISBN: 9780132992473

3rd Edition

Authors: Jonathan Berk, Peter DeMarzo

See More Books

Question Posted: Mar 07, 2024 01:00 AM

See More Questions

Suppose that an investor selects companies; A and B from the Johannesburg stock exchange. He observes that for the past ten years company A yielded an average investment return that is twice that of...
Gary, the production manager, was pleased at the company's income statement results. Actual DL cost was only $59,095, compared to the budgeted $69,000, while actual sales volume came in 200 units...
You have just started working for a financial planning firm and have been asked to analyze the performance and risk of the following 10 stocks to decide on the optimal portfolio for your client: The...
Compare and contrast megaloblastic anemia caused by vitamin B12 deficiency and that caused by folic acid deficiency. (10)
Review the sustainability balanced scorecard in Exhibit 17.10. For each of the four perspective provide an additional performance indicator that addresses an aspect of environment impact social...
Salinger Company estimates that total factory overhead costs will be $70,000 for the year. Direct labor hours are estimated to be 10,000. a. For Salinger Company, determine the predetermined factory...
True or False: A bearing that shows signs of brinelling but no sign of surface deformation or corrosion can yield a full life.
Model X100 sells for $120 per unit whereas Model X200 offers advanced features and sells for S500 per unit. Management expects to sell 50,000 units of Model X100 and 5,000 units of Model X200 next...
Assume that you have been asked to provide a position statement for your client to attend mediation in a family law case. The information in this case is the other parent who is the petitioner, Ms....
What is the capital market line (CML)?
An investments cost of capital is determined by its beta with what portfolio?
After receiving an inheritance of $25,000 on her 21st birthday, Ayn Rand deposited the inheritance in a savings account with an effective annual interest rate of 6%. She decided that she would make...
Who should you select for your systems-testing team? What skills should they have?
Why are human factors important in input design? What principles need to be considered in input design?
What is the most commonly accepted notation standard for object modeling?
Why is smart card technology able to store a tremendous amount of information? What are some examples of the applications of smart card technology?
In terms of aggregation relationships, what is the difference between the use of a hollow diamond and the use of a solid diamond?
(a) Find the angular frequency for the circuit in Problem 80 such that the magnitude of the reactance of the two parallel branches are equal. (b) At that frequency, what is the power dissipation in...
Subtract the polynomials. (-x+x-5) - (x-x + 5)
Can hedging lead to losses?
How can a firm become exposed to interest rate risk?
How can a firm use a swap to manage its interest rate risk?
If explaining how use a good evaluation can lead to better decision-making by DMFT managers and other stakeholders what or how would I show qualitative and quantitative evidence?
How does the Stark Law affect the healthcare system? Name the economic policy and define what it is to do. Then discuss what is the impact of the legislative change on healthcare in general
Technological change has two-sided effect, namely displacement and reinstatement of labor. What is the balance between loss of jobs and creation of jobs when the automation technologies are...

Explain why the market portfolio is efficient according to the CAPM.

Question:

Step by Step Answer:

According to the Capital Asset Pricing Model CAPM the market portfolio is considered efficient for several reasons Diversification The market portfoli...View the full answer

Corporate Finance

Students also viewed these Business questions