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Dear Sir
Please clarify
Your notes in section 6 of portfolio theory heading “well diversified portfolios” refer to systematic risk as the (market risk)
The following chapter on capital asset pricing model refer to the beta as the systematic risk/market riskAm I correct in assuming the Beta is the UNsystematic risk/Market risk, or that when you refer to market risk in CAPM that you are referring to the market Return?
Regards
Beta is the systematic risk divided by the market risk (i.e. the risk of the stock exchange as a whole).
Using betas assumes that shareholders are well-diversified and that unsystematic risk if irrelevant to them.
Although the previous examiner did have you calculate beta (as systematic risk divided by market risk), it is extremely unlikely that the current examiner will require it. The current examiner has always given you the beta (when it has been needed).
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