CAPM Web Exercise

CAPM Web Exercise

Introduction

The purpose of this assignment is to expand the boundaries of our knowledge by exploring some relevant facts and figures related to the capital asset pricing model. In this paper, we will look at the relationship of beta and expected rate of return of individual assets. In this exercise, we will also use the capital asset pricing formula to calculate the stock return of three companies:

McDonald's (MCD)

Bank of America (BAC)

Coca-Cola (KO)

Discussion & Analysis

The CAPM model establishes a relationship between the yield of a security and its risk, measured by a single risk factor, called beta (Hirt, 2006). ...