- Premium Academic Help From Professionals
- +1 323 471 4575
- academicperfect@gmail.com

Table of Contents

Order ID# 45178248544XXTG457 |
Plagiarism Level: 0-0.5% |
Writer Classification: PhD competent |

Style: APA/MLA/Harvard/Chicago |
Delivery: Minimum 3 Hours |
Revision: Permitted |

Sources: 4-6 |
Course Level: Masters/University College |
Guarantee Status: 96-99% |

**Instructions**

Capital asset pricing modeling

Capital Asset Pricing Model (CAPM) is a financial model used to calculate the expected return on an asset, such as a stock, bond, or portfolio, based on the asset’s systematic risk and the expected return of the market as a whole.

The model assumes that investors are risk-averse and that they require compensation for taking on additional risk. The expected return on an asset is therefore a function of its beta (systematic risk) and the risk-free rate, plus a premium for the additional risk associated with the asset.

The beta of an asset is a measure of the asset’s volatility relative to the overall market. A beta of 1 means that the asset has the same volatility as the market as a whole, while a beta greater than 1 indicates that the asset is more volatile than the market, and a beta less than 1 indicates that the asset is less volatile than the market.

The risk-free rate is the rate of return an investor can earn with no risk, such as by investing in government bonds. The premium for the additional risk associated with the asset is called the market risk premium, and it is the difference between the expected return on the market and the risk-free rate.

To calculate the expected return on an asset using CAPM, the following formula is used:

Expected Return = Risk-Free Rate + Beta x (Market Risk Premium)

For example, suppose the risk-free rate is 3%, the market risk premium is 7%, and the beta of a particular stock is 1.5. Then, the expected return on that stock would be:

Expected Return = 3% + 1.5 x 7% = 13.5%

This means that an investor who holds the stock would expect to earn an average annual return of 13.5% over the long term.

CAPM has some limitations, however. It assumes that investors are rational and that they have access to all relevant information, which may not always be the case. It also assumes that the market is efficient, meaning that all available information is already reflected in asset prices, which may not always be true.

Despite its limitations, CAPM remains a widely used tool for estimating the expected return on assets and for determining the appropriate level of compensation for taking on additional risk.

Capital asset pricing modeling

RUBRICExcellent Quality95-100%

Introduction45-41 points

The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned.

Literature Support91-84 points

The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned.

Methodology58-53 points

Content is well-organized with headings for each slide and bulleted lists to group related material as needed. Use of font, color, graphics, effects, etc. to enhance readability and presentation content is excellent. Length requirements of 10 slides/pages or less is met.

Average Score50-85%

40-38 points More depth/detail for the background and significance is needed, or the research detail is not clear. No search history information is provided.

83-76 points Review of relevant theoretical literature is evident, but there is little integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are included. Summary of information presented is included. Conclusion may not contain a biblical integration.

52-49 points Content is somewhat organized, but no structure is apparent. The use of font, color, graphics, effects, etc. is occasionally detracting to the presentation content. Length requirements may not be met.

Poor Quality0-45%

37-1 points The background and/or significance are missing. No search history information is provided.

75-1 points Review of relevant theoretical literature is evident, but there is no integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are not included in the summary of information presented. Conclusion does not contain a biblical integration.

48-1 points There is no clear or logical organizational structure. No logical sequence is apparent. The use of font, color, graphics, effects etc. is often detracting to the presentation content. Length requirements may not be met

You Can Also Place the Order at www.perfectacademic.com/orders/ordernow or www.crucialessay.com/orders/ordernow

error: Content is protected !!

Open chat

You can contact our live agent via WhatsApp! Via our number +1 323 471 4575.

Feel Free To Ask Questions, Clarifications, or Discounts, Available When Placing the Order.