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In the context of the Capital Asset Pricing Model how would you define beta How are beta determined and where can they be obtained What are the limitations of beta?
Wiki User
∙ 15y ago
In the context of the Capital Asset Pricing Model how would you define beta? How are beta determined and where can they be obtained? What are the limitations of beta?
Wiki User
∙ 15y ago
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How does capital asset pricing model help explain changing costs of capital?
It helps to explain the costs of capital by creating a model which intuitively understands the cost of capital as a function of a small number of well-understood economic variables, such as interest rate, demand, future discount, and capital stock.
Does the capital asset pricing model help us to get required rate of return or expected rate of return?
expected rate of return
What is advantage of security market line?
SML is also known as Security market line. It is the graphical representation of CAPM or Capital Asset Pricing Model. Here few advantages of SML approach: Financing of Capital Goods Additional Source of Finance
What does WACC mean?
Weighted Average Cost of Capital. This means the overall (blended) rate of return that a business (or other financial asset) has to generate to satisfy (a) its shareholders, and (b) its loan providers. For example, if a business has an equity/debt ratio of 1:3, and the shareholders expect a 15% return and the lenders expect a 5% return, then the WACC would be 7.5%. The equity and debt rates of return are in theory determined by the business's risk profile which can be calculated with reference to the risk-free rate, using the Capital Asset Pricing Model.
External and internal pricing?
External pricing is pricing of goods and or services that will be sold to out side company's. While internal pricing are prices set to sell goods to another department with in its own company.
What is the Capital Asset pricing model used for?
The Capital Asset Pricing Model is a pricing model that describes the relationship between expected return and risk. The CAPM helps determine if investments are worth the risk.
What has the author Haim Levy written?
Haim Levy has written: 'Relative effectiveness of efficiency criteria for portfolio selection' -- subject(s): Investments, Mathematical models, Stocks 'Investment and portfolio analysis' -- subject(s): Investment analysis, Portfolio management 'Research in Finance' 'The capital asset pricing model' 'The capital asset pricing model in the 21st century' -- subject(s): Capital assets pricing model, Capital asset pricing model
How do you determined value of baseball cards?
look at beckett.com or tuffstuff.com or buy a pricing magazine
What has the author Edward M Rice written?
Edward M. Rice has written: 'Portfolio performance, residual analysis and capital asset pricing model tests' -- subject(s): Capital assets pricing model
What has the author Rainer Kasperzak written?
Rainer Kasperzak has written: 'Aktienkursbildung' -- subject(s): Mathematical models, Capital assets pricing model, Capital market, Capital, Prices, Stocks
What is advantages and disadvantages of arbitrage pricing theory?
The advantage of arbitrage pricing theory is that it is not as restrictive as other pricing theories, factors in time, and does a better job of explaining expected returns. Limitations include not identifying underlying factors, ignoring the spread between long and short interest rates and ignoring inflation.
Which model is typically used to estimate the cost of using external equity capital?
The most commonly used model to estimate the cost of using external equity capital is the Capital Asset Pricing Model (CAPM). It calculates the cost of equity by considering the risk-free rate of return, the equity risk premium, and the individual company's beta, which measures the systematic risk of the company's stock compared to the overall market.
How much does a condo or a house cost?
There is no standard amount, pricing being determined by individual markets where the condominium or house may be located.
What has the author Hong Ren Wong written?
Hong Ren Wong has written: 'The theory of capital asset pricing'
What is the pricing stratagies of tradional food?
Pricing strategies of traditional food is determined by the traditional food market. They will set a price based off the demand. Usually in a normal graph you would choose the equilibrium price of traditional food.
What has the author Michele Boldrin written?
Michele Boldrin has written: 'Asset pricing lessons for modeling business cycles' -- subject(s): Business cycles, Capital assets pricing model, Econometric models, Risk
How does capital asset pricing model help explain changing costs of capital?
It helps to explain the costs of capital by creating a model which intuitively understands the cost of capital as a function of a small number of well-understood economic variables, such as interest rate, demand, future discount, and capital stock.
