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Find risk and return within equity markets

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Consider the following statement: "Over the long-run, risk and return within equity markets are not related. Selecting stocks with a higher risk (i.e. higher standard deviation of the return), does not necessarily guarantee a higher return. This fact contradicts investment theory, which states that higher risk should give a higher expected return." Do you agree with this statement? Critically evaluate it in light of the lessons we learn from the CAPM.

Reference no: EM133067428

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