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The Capital Asset Pricing Model

Chapter
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Part of the Quantitative Perspectives on Behavioral Economics and Finance book series (QPBEF)

Abstract

The Capital Asset Pricing Model values risky assets. This chapter explores its foundations in diversification and its limits, the calculation of the sensitivity to movements of the market, i.e., beta, combines them into the CAPM, which relates beta as a measure of risk to expected returns, and reconciles it with the continued usage of price-to-earnings ratios.

Copyright information

© The Author(s) 2018

Authors and Affiliations

  1. 1.Indiana UniversityIndianapolisUSA

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