Reference no: EM133035293

FINC13-301 Corporate Finance - Bond University

Learning outcome 1: Explain various finance theories and concepts, and their interrelationship and influence on the financial management of a company.

Learning outcome 2: Critically analyze financial management problems, and apply the relevant tools and techniques for financial decision making /corporate decisions

Capital asset pricing model.

The purpose of every investor is to maximise the return and minimise risk. Capital asset pricing model describes the relationship between risk and expected return. The basic premise of capital asset pricing model is that the stocks with a higher beta yield higher returns for the investors.

In the context of the above write a report addressing the following:

1. Introduction - A brief discussion on capital asset pricing model theory, benefits, and criticism.
2. Discussion on Beta (β) value, the risk return relationship and the techniques applied for computing the same
3. Review of the existing literature on the topic.
4. Empirical evidence - select ten sample companies from Muscat Securities Market and download the data from the relevant databases for a period of five years (2016-2020) and carry out the below tasks:
a. Compute the returns and beta of the selected securities on monthly data
b. Evaluate the risk return relationship and analyze whether securities with high beta resulted in high returns justify or support your views with appropriate statistical tools, and link it to literature
c. Examine any significant difference between the companies having high risk and low risk securities.
d. Classify the sample companies based on the high risk and low risk beta values and provide recommendations to the investors.
e. An appropriate conclusion based on the findings of your report.

You need to
• Demonstrate a conceptual understanding of the Capital Asset Pricing Model and Risk return relationship.
• Review the academic literature relating to CAPM and risk return relationship.
• Collect and compute the relevant data from appropriate sources
• Analyze data and apply appropriate tools and techniques to substantiate the results
• Ability to evaluate the results of the analysis , and give recommendations
• The report should be properly structured and most of the task should be addressed.
• Conclusions should be evident and be supported with some reasoning.
• The report should show some compliance to HARVARD STYLE referencing

Attachment:- Corporate Finance.rar