Elon Musk said There's a tremendous bias against taking risks. Everyone is trying to optimize...
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Elon Musk said There's a tremendous bias against taking risks. Everyone is trying to optimize their ass-covering. Which of the following statements about risk is NOT correct? If the CAPM is true and markets are efficiently priced then rational risk-averse investors:
Select one:
a. Deserve higher returns for holding higher beta assets.
b. Should minimise beta risk by diversifying.
c. May suffer asset price falls when market risk premiums rise.
d. Should only hold the market portfolio and government bonds (in positive or negative weights that sum to one).
e. Cant predict when diversifiable or systematically important news events will boost or crash individual asset prices.
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