Considering the capital asset pricing model

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1. Considering the Capital Asset Pricing Model, which of the following observations is incorrect?

In a well-diversified portfolio, unsystematic risk can be largely diversified away.

Systematic risk is considered to be a diversifiable risk.

Total risk is the sum of systematic risk and unsystematic risk.

Systematic risk reflects the co-movement of a stock with the market portfolio.

Unsystematic risk is specific to the firm.

2. Why Market price and the real value of shares are different? What is the implication for CFOs?

 

Reference no: EM131947280

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