Abstract

The relationship between the risk and return has always been a topic of interest to investors and academics. Capital Asset Pricing Model (hereafter, CAPM) is one of the most important theoretical foundations in the field of finance. The current study examines, first, the relationship between return and risk in the context of the Finnish stock market, and second, to identify if the realized return of Finnish companies highlights over/under-performance. The findings indicate that the risk–return relationship has been working in sync and the stock return of sample firms have been observed to be less volatile than the market index.

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