IDEAS home Printed from https://ideas.repec.org/h/spr/sprchp/978-0-387-34465-2_14.html
   My bibliography  Save this book chapter

Risk and Return on Equity and the Capital Asset Pricing Model

In: Quantitative Corporate Finance

Author

Listed:
  • John B. Guerard

    (McKinley Capital Management, Inc.)

  • Eli Schwartz

    (Lehigh University)

Abstract

Individual investors must be compensated for bearing risk. It seems intuitive that there should be a direct linkage between the risk of a security and its rate of return. Overall investors should be interested in securing the maximum return for a given level of risk, or the minimum risk for a given level of return. The concept of such risk-return analysis is the efficient frontier of Harry Markowitz (1952, 1959). If an investor can invest in a government security, which is backed by the taxing power of the Federal Government, then that government security is relatively risk-free. The 90-day Treasury bill rate is used as the basic risk-free rate.

Suggested Citation

  • John B. Guerard & Eli Schwartz, 2007. "Risk and Return on Equity and the Capital Asset Pricing Model," Springer Books, in: Quantitative Corporate Finance, chapter 0, pages 337-364, Springer.
    • Handle: RePEc:spr:sprchp:978-0-387-34465-2_14
    DOI: 10.1007/978-0-387-34465-2_14
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:sprchp:978-0-387-34465-2_14. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.