FIN 501-STRATEGIC CORPORATE FINANCE

FIN 501-Strategic Corporate Finance

FIN 501-Strategic Corporate Finance

Introduction

CAPM was presented by Treynor ('61), Sharpe ('64) and Lintner ('65). By inserting the notions of methodical and exact risk, it expanded the portfolio theory. In 1990, William Sharpe was Nobel cost victor for Economics. "For his aid to the concept of cost formation for economic assets, the so-called Capital Asset charge form (CAPM)." (Bernstein 2002)

 

CAPM formula

The CAPM equation is:

Expected Security come back = Riskless come back + Beta x (Expected Market Risk Premium)

or:r = Rf + Beta x (RM - Rf) {     Another type of the equation is: r-Rf = Beta ...