SFoyil

tiredofstudying Wrote:
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> remember risk free rate and MRP are constant for
> all assets. i think the term 'determined' is meant
> to say has unique impact on the asset weighting.
> so beta var(e) and alpha are the factors that are
> specific to each asset
>
>---

Actually it matters. If you change the risk-free rate and the market premium, each alpha's proportion will be different. They affect the alpha equally but not proportionately.

And if we already know alphas, why should we bother with betas?