Capital Asset Pricing Model - Essay Example

… The paper "Capital Asset Pricing Model, Arbitrage Pricing Theory" is a perfect example of a finance and accounting report.... The paper "Capital Asset Pricing Model, Arbitrage Pricing Theory" is a perfect example of a finance and accounting report.... These approaches are CAPM and APT model.... Using the CAPM model the return of a given stock is the summation of the risk-free assets the market premium.... However, CAPM does not factor in other factors like GDP, inflation and other factors, hence the evolvement of the APT model....

According to the Capital Asset Pricing Model (CAPM), a rational investor definitely invests in a portfolio that comprises high returns as much as it is risky, (Philips, 2004).... The Capital Asset Pricing Model only deals with the non-diversifiable risk commonly known as the market risk.... There are several assumptions associated with the Capital Asset Pricing Model which are highly criticized.... Another assumption of the Capital Asset Pricing Model (CAPM) is that investors have diversified their investment but in real practice, investors are afraid of doing so because they would rather invest in one company that will give a higher rate of return as compared to many which will give fewer returns....

… The paper “Myer Holdings Company - Products and Services, SWOT analysis, Capital Asset Pricing Model” is a cogent variant of a report on business.... The paper “Myer Holdings Company - Products and Services, SWOT analysis, Capital Asset Pricing Model” is a cogent variant of a report on business....

… The paper "Capital Asset Pricing Model Assessment" is an impressive example of a Macro & Microeconomics assignment.... nbsp; The paper "Capital Asset Pricing Model Assessment" is an impressive example of a Macro & Microeconomics assignment.... nbsp;           If we look at the estimation model of the Microsoft stock in the appendix, then we can see that αj for the Microsoft stock is 0....