The capital asset pricing models equations

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The capital asset pricing model's equations are extremely sensitive to the formula's variable inputs. A modest change in the market's rate of return (RoR), which is employed in the CAPM calculation, can have a large influence on the formula's result. Because of this, as well as the lack of a real, fully-diversified portfolio, Roll deemed the CAPM formula untestable.

Reference no: EM133629929

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