discussion on this topic

Discussion understanding

Discussion understanding

by Md Nafiz Raihan -
Number of replies: 1

From my understanding CAPM describes that relationship between risk and expected return, and serves as a model for the pricing of risky securities. The CAPM asserts that the only risk that is priced by rational investors is systematic risk, because that risk cannot be eliminated by diversification. The CAPM says that the expected return of a security or a portfolio is equal to the rate on a risk-free security plus a risk premium multiplied by the asset's systematic risk.