I dont know why I just cannot get the full picture somehow,is there anything to do to get a better hang of it ?
I would look on youtube for an explanation.
I just googled really quick for sharpe ratio, investopedia actually has a video on their definition page.
The problem is I both looked in investopedia and a lecture by shiller@coursera.Still confused,I mean is there something you can do to get a better grip other than actually reading more and more about it ?Since I havent finished the entire course doing questions is a bit pointless
I’d suggest writing out the formulas with the definition rather than the variable and just thinking about how that works…
so the CAPM would look like:
Expected return of asset = risk free rate of interest + risk of security compared to risk of market ( expected return of overall market - risk free rate of interest)
If you really sit and think about each input it is pretty intuitive and you will grasp it.
If you just can’t get it after a while I’d suggest you bow out of the program now as the concepts only get harder and more esoteric.