AFM Kaplan exam kit Q2 and Q9

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April 19, 2022 at 9:28 am #653875
1987pang
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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
April 19, 2022 at 2:39 pm #653923
John Moffat
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I 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.)
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