Identify the benefits and drawbacks of using the capm

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Reference no: EM131121665

DQ #1: Applying the Capital Asset Pricing Model (CAPM)

Analyze the Capital Asset Pricing Model (CAPM). Using the course text and an article from ProQuest as references, address the following:

Explain how the CAPM assists in measuring both risk and return.

Explain how the CAPM assists in calculating the weighted average costs of capital (WACC) and its components.

Illustrate why some managers have difficulty applying the Capital Asset Pricing Model (CAPM) in financial decision making.

Identify the benefits and drawbacks of using the CAPM.

Develop a 200 - 300 word answer supporting your position.

DQ #2: Risk Identification and Mitigation

Using the annual report from the company that you have selected for your Final Project (Pandora Media Inc) discuss the risks the company faces and the actions they take to mitigate those risks. Refer to the Management Discussion and Analysis section of the annual report for this information.

As part of your response consider whether you think the risk mitigation techniques are reasonable. Discuss what others concerns or advice you would offer if you had the opportunity.

Include in your post a calculation for the probability of one of the risks identified by your company. This information may not be available in the annual report, therefore you will likely need to conduct research and critical thinking to complete this calculation.

Tip: For help with reading an annual report access this handy guide from Money Chimp (https://www.moneychimp.com/articles/financials/fundamentals.htm) .

Develop a 200 - 300 word explanation supporting your position.

Reference no: EM131121665

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