Question

Using the CAPM, show that the ratio of the risk premiums on any two stocks is...

Using the CAPM, show that the ratio of the risk premiums on any two stocks is equal to the ratio of their BETAS.

(Hint: Market Risk premium = Expected return on Market - Risk Free Rate ; Apply this concept in this problem to define risk premium on any asset.) Please explain in detail.

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Answer #1

Hence proved.

Thankyou.....

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