tag:blogger.com,1999:blog-4900303239154048192.post8894503376550510075..comments2024-03-06T06:34:42.881-05:00Comments on EconoSpeak: Does Alan Greenspan Understand the Banking Sector?Unknownnoreply@blogger.comBlogger1125tag:blogger.com,1999:blog-4900303239154048192.post-81195058172761600852015-08-21T15:04:19.823-04:002015-08-21T15:04:19.823-04:00You seem to be assuming that the CAPM is valid, so...You seem to be assuming that the CAPM is valid, so the required return on equity depends on beta. My impression is that the CAPM doesn't work at all and that average returns on equity are more related to own variance than to beta.<br /><br />In any case, I think you can cut the CAPM middleman out of the argument about the return on banks equity for current leverage. How about looking at the average return over the past few decades (I guess it will be much higher than the return on banks' debt).<br /><br />Roberthttps://www.blogger.com/profile/14455788499385673507noreply@blogger.com