easy · CFA Level I pm
Oakridge Capital is comparing two assets. Asset X has a total risk (σ) of 25% and a beta of 0.8. Asset Y has a total risk of 20% and a beta of 1.2.
According to the CAPM, which asset must have a higher required return?
- Asset Y, because its beta is higher.
- Asset X, because its total risk is higher.
- Both assets must have the same return if they are on the CML.
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