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Risk and Return - CAPM (Measures of Risk and Return (Factors affecting…

- - - - Variance of portfolio more dependent on covariance of securities than variance of individual securities
        
        Principle of Diversification
        
        Reduce all unsystematic risk
- - - - Investor moves up or down CAPM depending on risk apetite
      - Homogenous expectations = all investor choose market portfolio
  - - - Any test of CAPM is only test that portfolio not the true market portfolio