How Do You Explain a Stock That Earns a Return

question 63

Essay

How do you explain a stock that earns a return higher than the required rate of return from the CAPM?

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Definitions:

Population

A collection of the same species individuals who live in a specified area and breed among themselves.

Hardy-Weinberg Principle

A principle stating that allele and genotype frequencies in a population will remain constant from generation to generation in the absence of other evolutionary influences.

Equation

A mathematical statement that asserts the equality of two expressions.

Genetic Equilibrium

A state in which the frequency of alleles in a population remains constant over time, assuming no evolutionary forces are at work.