Risk and return
Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary.
Capital Asset Pricing Model
Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.
Provide short answers to the following questions
h) If the standard deviation of a stock’s return is 5% and its expected return is 8%, what it the C.V.?
i) The covariance between stock A and market return is 135. The standard deviation of market’s return is
15%. What is the beta of stock A?
l) Is it true that a market which is efficient in its semi-strong form is automatically efficient in its weak
form?
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