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In afm lecture notes ch 8 capm ( open tuition lecture notes) there is a example on combining investment..they are showing to combine betas for invest c it says 30% ..and risks is same as market ..I saw solution that are multiplying 30% with 1 ….why with 1 ?? Market risk is not mentioned in example
There is absolutely no point in using the lecture notes without watching the lectures – it is made clear on the first page of the notes. The notes are lecture notes, and it is in the lectures that I explain and expand on the notes – you cannot expect me to type out my lectures here.
In the example, C has the same risk as the market. Therefore the beta of C is 1.
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