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Homework answers / question archive / Using the concept of beta and standard deviation, explain why it is highly unlikely that any investor or for that matter pension fund, private equity firm, venture capitalist, or anyone on TV shows(Hint: American Greed, Shark Tank) could ever beat the market average
Using the concept of beta and standard deviation, explain why it is highly unlikely that any investor or for that matter pension fund, private equity firm, venture capitalist, or anyone on TV shows(Hint: American Greed, Shark Tank) could ever beat the market average. BE SPECIFIC in your example calculations to receive full credit!
Answer:
Standard deviation is a measure of total risk which beta measures only systematic risk
Step-by-step explanation
Due to expectations of the yet to come expected growth and the insecurity of the firm, this will lead to a essential return from the shareholders and accordingly share prices will imitate the market opinions. Hence, all the facts have been factored in the share price and hence effective markets do not let anyone outperform. Standard deviation is a measure of total risk which beta measures only systematic risk.
