Capital asset pricing model to estimate risk for real estate

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An analyst who looks at real estate decides to apply the capital asset pricing model to estimate the risk (beta) for real estate. He regresses returns on a real estate index (based on appraised values) against returns on a stock index, and estimates a beta of 0.20 for real estate. Would you agree with this estimate? If you do not, what might be the sources of your disagreement?

Reference no: EM131571897

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