Using the data in the following table, calculate the volatility​ (standard deviation) of a portfolio that is 75% invested in stock A and 25% in stock B.

Q: Tex-Exs Medical Hospital, a for profit entity, is considering a new ortho center. Related…

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Q: 1. Distinguish between payback and discounted payback period.

A: Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only one…

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Q: A $350,000 house in Hamilton was purchased with a down payment of 20.00% of its value and a 20 year…

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Q: What is the duration of a five-year, $1,000 Treasury bond with a 10 percent annua selling at par…

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Q: he Equator Principles set out a step-by-step process for 'green financial institutions.' Select…

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Q: What are the basic risks faced by financial intermediaries? Discuss each thoroughly.

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Q: A 5-year project will require an investment of $100 million. This comprises of plant and machinery…

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Q: a) Write the equation to evaluate this project when using Present Worth Method b) What is the…

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Q: Which of the following factors is/are included in Fama and French’s (2015, “A five-factor asset…

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Q: Hayward Enterprises, a successful imaging products firm, is considering expanding into the lucrative…

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Q: teady​ Company's stock has a beta of 0.21. If the​ risk-free rate is 5.9% and the market risk…

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A: Here,

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Q: If you thought that interest rates were going to rise in the next few months, how might this affect…

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Q: Develop an amortization schedule for the loan described. (Round your answers to the nearest cent.)…

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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.