The Y intercept, where the value of ? is 0, is referred to as the risk-free rate. The slope of the line is the market-risk premium (MRP).
This shows how much additional return an investor can expect as compensation for taking on more risk.This relationship can be summarized as E(ri)= rf + ?i * (E[RMkt]-rf). but “who draws the line?” … who sets the risk value?If you are investing, do you go with conventional wisdom … or do you set your own risk value/SML line?The Y intercept, where the value of ? is 0, is referred to as the risk-free rate. The slope of the line is the market-risk premium (MRP).
The Y intercept, where the value of ? is 0, is referred to as the risk-free rate. The slope of the line is the market-risk premium (MRP).
This shows how much additional return an investor can expect as compensation for taking on more risk.This relationship can be summarized as E(ri)= rf + ?i * (E[RMkt]-rf). but “who draws the line?” … who sets the risk value?If you are investing, do you go with conventional wisdom … or do you set your own risk value/SML line? https://charteredessay.com/mkt651-unit-2-individual-projectthe-marketing-p-for-product-defines-the-features-and-benefits-of-the-product-that-explains/
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