--%>
Assignment Help - homework help

Risk from perspective of the Capital Asset Pricing Model

Discuss risk through the perspective of the Capital Asset Pricing Model (CAPM).
The Capital Asset Pricing Model, or CAPM, can be utilized to compute the appropriate required rate of return for an investment project specified its degree of risk as measured by beta (β). A project's beta reveals its degree of risk relative to the total stock market. In the CAPM, while the beta term is multiplied by the market risk premium term, the result is the additional return onto the risk-free rate that investors demand from that individual project. High-risk (high-beta) projects have high required rates of return, and low-risk (low-beta) projects have low required rates of return.

   Related Questions in Finance Basics

  • Q : What is Amendment Amendment : A

    Amendment: A proposed or customary change to a bill in the Legislature, the California Constitution, acts passed by the Legislature, or ballot initiative.

    		•
  • Q : Methods to determine Promotional Budget

    What are the methods to determine Promotional Budget? Explain in brief.

    		•
  • Q : Consumers advocates expressed concern

    Consumer's advocates expressed concern over such merger possibilities. Elucidate this statement.

    		•
  • Q : Define Cash Basis of Accounting Cash

    Cash Basis of Accounting: The base of accounting in which expenditures and revenues are recorded whenever cash is received or distributed.

    		•
  • Q : What do analyze in pro forma financial

    Normal 0 false false

  • Q : Free-rider problem Normal 0 false false

    Normal 0 false false

    		•
  • Q : How do mergers influence small

    How do mergers influence small businesses?According to a recent study through Federal Reserve & Wharton Financial Institutions Center economists, not a great deal. Their analysis revealed that acquisitions don't seem to be related with a sig

    		•
  • Q : Decision rule using internal rate of

    Describe decision rule for accepting or rejecting proposed projects while using internal rate of return? Whenever the internal rate of return is greater than or equal to the required rate of return, the hurdle rate, the project is accepted. Whi

    		•
  • Q : Explain Language Sheets Language Sheets

    Language Sheets: The copies of the current Budget Act appropriation items offered to Finance and departmental staff each fall to update for the proposed Governor’s Budget. Such updated language sheets become the proposed Budget Bill. In spring,

    		•
  • Q : Explain Planning Estimate Planning

    Planning Estimate (PE): A document employed to record and monitors those present and budget year expenditure adjustments comprising budget change proposals accepted for inclusion in the Governor's Budget. PEs is broken down by department, character, f

    		•