Explain what beta represents in terms of asset pricing

Reference no: EM131288701

If a stock has both diversifiable risk and nondiversifiable risk, which, if any, of these risks are considered in the pricing of the asset? In the context of the CAPM, what is the term represented by E(RM) - Rf? Explain what beta represents in terms of asset pricing ? If a stock's return and risk are such that this would plot above the security market line, is this stock overpriced or underpriced?

Reference no: EM131288701

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