Among the factors that affect money demand, interest rates only affect speculative demand, while transaction and prevention needs are also related to income. Therefore, as interest rates rise, money demand may not necessarily decrease. In addition, there are special situations of liquidity traps in speculative demand. Under certain conditions, if interest rates rise, money demand may not change.

The capital asset pricing model (CAPM) is the longest-used model for measuring market risk and return, and most companies still use it. The assumption is that although diversification of investments is beneficial to reducing the company's specific risks , but most investors still concentrate their assets on a limited number of assets. Extended information

The capital asset pricing model (CAPM) is the longest-used model for measuring market risk and return, and most companies still use it. The assumption is that although diversification of investments can reduce the company's specific risks There are benefits, but most investors still concentrate their assets in a limited number of assets.

The more popular one is the arbitrage pricing model (APT) that emerged later. Its assumption is that investors will take advantage of arbitrage opportunities to profit, that is, if two investment portfolios face the same risk but provide different Expected rate of return, investors will choose a portfolio with a higher expected rate of return and will not adjust returns to equilibrium.

Baidu Encyclopedia-Expected rate of return