Suppose a New Type of Risk Appears

question 10

Essay

Suppose a new type of risk appears.It is systematic, uncorrelated with previous systematic risks, was not priced before, but can be measured by a single variable.You try to price it, and you use both the CAPM and the APT.Explain how this new risk makes its way into each of the approaches.

---

Definitions:

Manage Conflict

The process of identifying and addressing differences that threaten the harmony of a group or organization, aiming at positive resolution.

Surrendering

The act of yielding or giving up control, often in a context of conflict, to another party.

Bullying Behavior

Refers to repeated aggressive actions or threats by an individual or group intended to harm or intimidate another individual, which can be physical, verbal, or psychological.

Verbal Tirade

A long, angry speech of criticism or accusation.