Select your language

Suggested languages for you:
Log In Start studying!
Answers without the blur. Sign up and see all textbooks for free! Illustration


Essentials Of Investments
Found in: Page 226
Essentials Of Investments

Essentials Of Investments

Book edition 9th
Author(s) Zvi Bodie, Alex Kane, Alan Marcus, Alan J. Marcus
Pages 748 pages
ISBN 9780078034695

Answers without the blur.

Just sign up for free and you're in.


Short Answer

If the simple CAPM is valid, which of the situations in Problems 13 – 19 below are possible? Explain. Consider each situation independently.

The correct answer would be: “Not Possible”

See the step by step solution

Step by Step Solution


The CAPM or the Capital Asset Pricing Model is used to determine the rate of return of an asset by weighing the associated risks and other factors. It is measured in terms of beta and the required rate of return.


Portfolio A clearly dominates the market portfolio. It has a lower standard deviation with a higher expected return.

Therefore this is not possible, if the CAPM is valid.

Most popular questions for Business-studies Textbooks


Want to see more solutions like these?

Sign up for free to discover our expert answers
Get Started - It’s free

Recommended explanations on Business-studies Textbooks

94% of StudySmarter users get better grades.

Sign up for free
94% of StudySmarter users get better grades.