Solved Questions

Explain the following statement: The stand-alone risk of an individual corporate project may be quite high, but viewed in the context of its effect on stockholders' risk, the project's true risk may not be very large.

Have there been any studies that question the validity of the CAPM? Explain.

How can a firm influence the size of its beta?

What happens to the SML graph when risk aversion increases or decreases?

What is meant by the term, positive alpha? Negative alpha?