Market model

Definition: [crh] The market model says that the return on a security depends on the return on the market portfolio and tDefinition: he extent of the security's responsiveness as measured by beta. The return also depends on conditions that are unique to the firm. The market model canDefinition: be graphed as a line fitted to a plot of asset returns against returns on the market portfolio. This relationship is sometimes called thDefinition: e single-index model.

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