New answers tagged beta
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Definitions of Beta
One thing to note is that the CAPM can be rewritten as
$$r_i=r_f(1-\beta_i)+\beta_i r_m$$
Thus, one can identify $\alpha_i$ with $(1-\beta_i)r_f$.
Then, we we have, for the CAPM,
$$\beta_i=\frac {r_i-...
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What is the relation between "Capital Market Line" and "Capital Asset Pricing Model (CAPM)"?
Is this right?
No. $\beta_{i,M} = \frac{\sigma_i \rho_{i,M}}{\sigma_M}$ (note the correlation $\rho_{i,M}$ that is missing from your formula.)
The first formula (CML) is only for portfolios on the ...
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