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)

Discounted pay back period (dpbp), Discounted Pay Back Period (DPBP) : ...

Discounted Pay Back Period (DPBP) : The discounted payback period is the number of periods taken in recovering the investment outlay on the present value basis. Discounted pa

Capital budgeting case study, RWE Enterprises is a small manufacturer in Ad...

RWE Enterprises is a small manufacturer in Adelaide South Australia, feed suppliments for cattle. New production line NPV, Payback period and discounted payback period

Book value and liquidation value per share for common stock, Compare and co...

Compare and contrast the book value and liquidation value per share for common stock. Is one method more reliable? Explain. The Book Value of a firm's common stock is institute

"a" round financing, "A" Round Financing "A" Round Financing is the fir...

"A" Round Financing "A" Round Financing is the first main round of business financing through private equity investors or venture capitalists. In private equity investing, an "

Sophisticated methods of mortgage backed security valuation, MBS ...

MBS are the most complicated securities that are sensitive to interest rates. The factors that affect the price of MBS are varied and most of th

risk/return profile of the convertible security, Let us consider thr...

Let us consider three scenarios of changes in stock prices and look into the risk return profile of the convertible security. Let us assume that the stock prices

S&p cnx 500, S&P CNX 500 Here, the stocks are included as per their res...

S&P CNX 500 Here, the stocks are included as per their respective market capitalization. It includes companies which lead in their respective industry sector. They should close

Bond features that affect interest rate risk, Various bond feat...

Various bond features largely affect the degree of correlation between the bond's prices and the bond's interest rates. Some of the bond feature

Historical differences in equity securities, Public Bourses The origin ...

Public Bourses The origin of this type of bourses can be found in the legislative work of Napoleon. These type of bourses are regulated by the government, brokers are appointed

Modern approach, Meaning merits nd demerits of modern approch of financial ...

Meaning merits nd demerits of modern approch of financial management

Write Your Message!

Name

Email id

Message

Verfication Code

User Account

All Pages