Capital asset pricing model (capm), Financial Management

Assignment Help:

Capital Asset Pricing Model (CAPM)

 

Capital Asset Pricing Model (CAPM) is a model which utilizes the measure of systematic risk, 'B' to price assets. The expected rate of return is given by:

 

Ke       =          Rf + B x {Rf - Rm}

 

Where:

Rf = Risk free rate of return,

Rm = Market rate of return,

Ke = Expected rate of return,

B = Beta value for the stock 

 


Related Discussions:- Capital asset pricing model (capm)

Define the meaning of procurement, Define the meaning of procurement T...

Define the meaning of procurement Term procurement was used in a broad sense so as to include the whole gamut of raising funds externally.

Bond indenture, Bond Indenture An indenture builds the formal conditio...

Bond Indenture An indenture builds the formal conditions of a lending relationship between a borrower and a lender. It is a written record, and it outlines most important func

Calculate average annual return, Q. Calculate Average Annual Return? An...

Q. Calculate Average Annual Return? An investor buys a bond in 1978 maturity in 1980 at Rs.900. It has a maturity value of 10 years and par value of Rs. 1000. It fetches RS.90

Leverage, evaluate the importance of leverage in a small scale companyestio...

evaluate the importance of leverage in a small scale companyestion..

Cost sheet, A proforma cost sheet of a company provides the following data:...

A proforma cost sheet of a company provides the following data:   RO Cost (per unit)      Raw materials 52

Investment consultant , Suppose, you are working as an investment consultan...

Suppose, you are working as an investment consultant in a consultancy firm and most of your clients are habitual investors, who are maintaining their own portfolios comprising of v

Debt ratio, What is the Debt Ratio? Describe please.

What is the Debt Ratio? Describe please.

Demand at each particular exchange rate, The usual number of passengers usi...

The usual number of passengers using the service is dependent upon the demand at each particular exchange rate. At 1·52 Euro/£ expected demand = (0·33·)(500 + 460 + 420) = 460

Issuer’s considerations, Issuer's Considerations Cash Flows: Issuers ma...

Issuer's Considerations Cash Flows: Issuers may consider the period for which the funds are required and try to spread the borrowings in a way to minimize the costs. Generally,

Variable costs, V ariable Costs It is an expense that varies direct...

V ariable Costs It is an expense that varies directly with changes in business activities for example the cost of raw materials rise and decreases as the volume of producti

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd