Session 9 Chapter 12 - Handout.pdf - Winter 2021 New...

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Winter 2021 New College PASS Program ADMS 3530 Finance PASS Leader: Dhruv, Diana, Lawson, Victoria March 22, 24, 25 Handout for Chapter 12: Risk, Return and Capital Budgeting Handouts will be given out at the PASS sessions only. You have to be in attendance to receive a copy.
KEY TERMS & TOPICS: Measuring market risk (β) Capital asset pricing model (CAPM) 1. Beta of a Stock We measure the market risk of an individual stock by comparing the sensitivity of the stock’s returns to the changes in the returns on the market portfolio Beta, or β, is a method of measuring the sensitivity of a stock’s return to the return of the market portfolio β of a portfolio = the weighted average of β of individual stocks What does beta indicate?

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