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Write 2 page essay on the topic CAPM Exercise.That means if S&P moves down by 10 percent, BAC will move in the same direction by 18.6%. Reverse is also true when S&P moves up by 10 percent, BAC would
Write 2 page essay on the topic CAPM Exercise.
That means if S&P moves down by 10 percent, BAC will move in the same direction by 18.6%. Reverse is also true when S&P moves up by 10 percent, BAC would also move up by 18.6%.
Opposite is the case with McDonald’s, which is a least risky stock. That can be seen from its low beta value equivalent to 0.31. Those who want safe and secured returns will eventually go for investing in McDonald’s. It will have least volatility among all four stocks with respect to the chosen index of S&P. Thus, it can be concluded that it is important for the investors to know beta of the stock so that one can make investment as per their risk profile and temperament. Thus, Capital Asset Pricing Model is a good way of judging the share from view point of the risk
