Capital Asset Pricing Model , Financial Management

Assignment Help:

What is Capital Asset Pricing Model? Please provide me report on Capital Asset Pricing Model. It is about 2000 words count report on topic Capital Asset Pricing Model.

Related Discussions:- Capital Asset Pricing Model

Exchange of physicals, Exchange of Physicals: A trader can also complet...

Exchange of Physicals: A trader can also complete the futures contract by engaging in exchange of physicals. In this method, the parties agree to exchange cash and the commodit

Functions of treasurer, Functions of Treasurer:- (1) Cash Management: -...

Functions of Treasurer:- (1) Cash Management: - It comprises the managing of cash receipts and cash payments of the business. (2) Banking Relations: - It comprises operating

Cost control strategies in organisations, 1. List the common elements of a ...

1. List the common elements of a submission for a major resource acquisition (purchase) 2. What is the difference between: A fixed asset and current asset? 3. If you worked i

Incorporation of the risk in investment proposal, Q. Incorporation of the R...

Q. Incorporation of the Risk in Investment Proposal? Incorporation of the Risk in Investment Proposal: - As stated previous risk is involved in every capital budgeting decision

Securitization structure of mortgage backed securities, A mortg...

A mortgage, is sold to the SPV at the discretion of the bank to securitize it into a mortgage backed security, that is, the mortgage is said to

Convertible bonds, Basics of Convertible Bonds The provision of convers...

Basics of Convertible Bonds The provision of conversion in a corporate bond entitles the bondholder the right to convert the bond into a predetermined number of shares of commo

par value, The face value of the debt security can be thought of as ...

The face value of the debt security can be thought of as the principal amount on which interest is paid by the issuer. It is the amount the issuer is willing to r

Define some of government need imposed on public corporation, What are some...

What are some of the government needs imposed on a public corporation that are not imposed on a private, closely held corporation? Public corporations should submit audited finan

Forms of bank finance, Q. Forms of Bank Finance? A firm can draw funds ...

Q. Forms of Bank Finance? A firm can draw funds from a bank within the maximum credit limit sanctioned. It can draw funds in the following forms: 1) Overdraft 2) Cash Cre

What is the required rate of return on the project, The risk free rate is 1...

The risk free rate is 10 percent and the expected return on the market portfolio is 14 percent. A firm considers a project that is expected to have a beta of 1.3, whereas the beta

2/14/2013 12:27:16 AM Definition of ''Capital Asset Pricing Model - CAPM'' A model that explains the relationship among risk and expected return and that is utilized in the pricing of risky securities. The common idea behind CAPM is that investors need to be compensated in two ways: time value of money and risk. The time value of money is presented by the risk-free (rf) rate in the formula and compensates the investors for placing money in any type of investment over a period of time. The rest half of the formula represents risk and calculates the amount of compensation the investor requirements for taking on additional risk. This is computed by taking a risk measure (beta) that compares the returns of the asset to the market over a period of time and to the market premium (Rm-rf).

2/14/2013 12:27:16 AM

Definition of ''Capital Asset Pricing Model - CAPM''

A model that explains the relationship among risk and expected return and that is utilized in the pricing of risky securities.

The common idea behind CAPM is that investors need to be compensated in two ways: time value of money and risk. The time value of money is presented by the risk-free (rf) rate in the formula and compensates the investors for placing money in any type of investment over a period of time. The rest half of the formula represents risk and calculates the amount of compensation the investor requirements for taking on additional risk. This is computed by taking a risk measure (beta) that compares the returns of the asset to the market over a period of time and to the market premium (Rm-rf).

Write Your Message!

Name

Email id

Message

Verfication Code

User Account

All Pages