Chapter 11, Problem 10CQ

Summary Introduction

To Determine: To respond to the given statement.

Statement: “Risky security do not have expected return lesser than the risk-free rate since no risk-averse investor is willing to hold an asset in equilibrium”.

Introduction:

Beta is the risk related with a portfolio or a security in connection to the market. It is also termed as the beta coefficient; it is a method for deciding on the requirement on security or stock that may move in contrast with the market. Expected Return is a process of estimating the profits and losses an investor earns through the expected rate of returns. Standard deviation is apportioned of distribution of a collection of figures from its mean.