The component of the stock return that is independent

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The component of the stock return that is independent of the portfolio return is always “off- set” or “canceled out” in a portfolio.
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Beta Let r m =return on market portfolio E[r A |r m ]=a A +b A r m When the explanatory variable in our conditional expectation equation is the market,
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  • Fall '10
  • BrianBoyer
  • Variance, Probability theory, Modern portfolio theory, rp, rp given rp

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