question archive The expected return of TSE 300 next year is 10%, with standard deviation 16%
The expected return of TSE 300 next year is 10%, with standard deviation 16%
Subject:EconomicsPrice: Bought3
The expected return of TSE 300 next year is 10%, with standard deviation 16%. The standard deviation of Stock X is also 16%. a. Briefly evaluate the following argument: "Expected return of X cannot be less than 10%. If it were less, nobody would ever hold X, as investing in the market portfolio gives greater expected return for the same risk". In context of the CAPM model, is this statement true? If yes, just write "yes". If no, explain briefly. b. Briefly evaluate the following statement: ""Expected return of X cannot be greater than 10%."
