ER+vs+RR - Required return • E R j = r f  j E R M –...

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Expected Return Vs Required Return Risk-Return Analysis (Individual asset or portfolio) Expected Return Historical Expectation Total Risk Variance and standard deviation of returns CAPM Analysis (Individual asset or portfolio)
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Unformatted text preview: Required return • E ( R j ) = r f +  j [ E ( R M ) – r f ] • Systematic Risk • Beta estimated from past returns of asset j and market index 79 Portfolio Diversification; Market Portfolio Excess Return Is investor diversified?...
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