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What would happen to the firm’s overall risk level and value over time if it used the WACC as the required rate of return in all circumstances?
Question description
Just help me about following questions. thank you. it is not a paper, just the short answer questions.
1. According to the CAPM, for what types of risk do investors receive compensation? Explain why this is the case.
2. If you were in charge of purchasing 20 stocks to form a portfolio, would you rather know the standard deviation of each stock or the beta of each stock? Explain
3.What would happen to the firm’s overall risk level and value over time if it used the WACC as the required rate of return in all circumstances?