8. Capital Asset Pricing Model

Question 1

What is CAPM

Answer 1

Capital Asset Pricing Model

= calculate investment risk & return on investment investor should expect

Question 2

Beta Role in CAPM

Answer 2

Beta is the only relevant measure of a stock’s risk. It measures a stock relative volatility - that is, it shows how mucht the price of a particular stock jumps up and down compared with how much the entire stock market jumps up and down.