ACCA F9 Capital asset pricing model (part b)
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sir if I go through the open tuition and just do exam kit without referring any other study is it sufficient?
Dear sir,
The researchers worked out CAPM by observing the below nature of financial assets:
“Most stocks go down when interest rates go up, but some go down a lot more”
Is it correct ?
Thanks for your comment 馃檪
Yes – that is certainly correct.
When interest rates go up share prices go down, and vice versa.
The whole basis of CAPM is that the more risky a share is, the more its share price will fluctuate.
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Thank you very much for the comment 馃檪
Thank you for the lecture.
Can the systematic risk be diversified by investing in many different economies ie in various countries?
Yes – potentially it can (although with globalisation different countries are tending to move in the same way, more and more).
It is a good point to make in the answer to a written question if you get the chance (but you would not be expected to deal with in calculation questions).