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The Impact of the Degrees of Operating and Financial Leverage on Systematic Risk of Common Stock

Published online by Cambridge University Press:  06 April 2009

Gershon N. Mandelker  and
S. Ghon Rhee
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Extract

The capital asset pricing model postulates that the equilibrium return on any risky security is equal to the sum of the risk-free rate of return and a risk premium measured by the product of the market price of risk and the security's systematic risk. In the capital asset pricing model, beta as an index of systematic risk is the only security-specific parameter that affects the equilibrium return on a risky security.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 19 , Issue 1 , March 1984 , pp. 45 - 57
Copyright
Copyright © School of Business Administration, University of Washington 1984

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