Dear Tutor,
I would like to know the difference between CAPM formula mentioned in the questions above. Q.2, THe CAPM is 3.5%+1.748(10%-3.5%), while in Q.9, it is 4.5%+1.53(6%). Perhaps, in short, what are the difference between market risk premium (Q9) and market return(Q2). Are they different in calculating CAPM ?? Thank you.
Jimmy
Ask the Tutor ACCA AFM
AFM Kaplan exam kit Q2 and Q9
4y ago#1I do not have the Kaplan Kit (only the BPP Revision Kit).
However the market risk premium is the market return less the risk free rate. (I do explain this, with examples, in my free lectures on CAPM.)
Sign in to reply to this topic.