Abstract
This chapter discusses the relationship between risk and return. It is obvious that investors would want a higher exposure to risk to be compensated with a higher return, but in order to estimate the actual return investors should require at different levels of risk, we need a model. The Capital Asset Pricing Model (CAPM), one of the models most widely used in finance, provides a simple and intuitive way to tackle this issue.
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© 2011 Javier Estrada
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Estrada, J. (2011). Required Returns and the CAPM. In: The Essential Financial Toolkit. IESE Business Collection. Palgrave Macmillan, London. https://doi.org/10.1057/9780230295193_5
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DOI: https://doi.org/10.1057/9780230295193_5
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-32888-8
Online ISBN: 978-0-230-29519-3
eBook Packages: Palgrave Economics & Finance CollectionEconomics and Finance (R0)