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The Capital Asset Pricing Model (CAPM) is a financial model that assumes returns on a portfolio
are normally distributed. Suppose a portfolio has an average annual return of 12.8% (i.e., an
average gain of 12.8%) with a standard deviation of 35%. A return of 0% means the value of the
portfolio doesn't change, a negative return means that the portfolio loses money, and a positive
return means that the portfolio gains money. (Round your answers to two decimal places.)

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The Capital Asset Pricing Model CAPM is a financial model .pdf

  • 1. The Capital Asset Pricing Model (CAPM) is a financial model that assumes returns on a portfolio are normally distributed. Suppose a portfolio has an average annual return of 12.8% (i.e., an average gain of 12.8%) with a standard deviation of 35%. A return of 0% means the value of the portfolio doesn't change, a negative return means that the portfolio loses money, and a positive return means that the portfolio gains money. (Round your answers to two decimal places.)