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Unformatted text preview: Thus, the risk of the portfolio is actually less than the weighted average of the risks of the securities in the portfolio. 4. Beta measures the sensitivity of the returns of a portfolio or security to the fluctuations of the market portfolio. We use beta to measure the systematic risk of an asset or portfolio. 5. The CAPM says that systematic risk drives the expected returns of an asset. 6. The security market line describes the relation between systematic risk and expected return....
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This note was uploaded on 08/26/2010 for the course FINA FINA111 taught by Professor Lynnpi during the Spring '09 term at HKUST.
- Spring '09