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- Explain the relationship between JENSEN's alpha and the security marketline of the Capital asset pricing model (CAPM).This is a generalized framework for analyzing the relationship between risk and return: a. capital asset pricing model b. diversification theory c. capital market line d. arbitrage pricing theoryAsset pricing Models provide a logical basis for computing the risk premiums anddetermining the asset price. Describe using CAPM and APT. Also differentiatebetween CAPM & APT. Also discuss its assumptions. This question is related to Investment Analysis and Portfolio Management
- Derive the Capital Asset Pricing Model (CAMP) and also discuss the assumptions that are necessary in the development of the CAPM. Explain how CAMP related to portfolio theory. Discuss managerial applications of CAPM.Present the Capital Asset Pricing Model (CAPM) and discuss how the theoretical model is made operational when going from the theory to the empirical practiceCritically outline the use of portfolio theory and asset pricing models in capital markets.
- In the context of the Capital Asset Pricing Model (CAPM), the relevant measure of risk is A. standard deviation of returns. B. beta. C. variance of returns. D. unique risk.Explain the capital asset pricing model (CAPM), its relationship to the security market line (SML), and the major forces causing shifts in the SML.Capital asset pricing theory asserts that portfolio returns are best explained by:a. Economic factors.b. Specific risk.c. Systematic risk.d. Diversification.