In creating the T2 measure one mixes P* and T-bills to match the _____ of the market and in creating the M2 measure one mixes P* and T-bills to match the _____ of the market.

In creating the T2 measure one mixes P* and T-bills to match the _ of the market and in creating the M2 measure one mixes P* and T-bills to match the _ of the market.

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter9: Forecasting Exchange Rates

Section: Chapter Questions

Problem 20QA

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Concept explainers

Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary.

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.

Question

In creating the T² measure one mixes P* and T-bills to match the _____ of the market and in creating the M² measure one mixes P* and T-bills to match the _____ of the market.

Group of answer choices

beta, alpha

alpha, beta

standard deviation, beta

beta, standard deviation

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