Assignment on Financial Management and CAPM model

Added on - 21 Apr 2020

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Running head: FINANCIAL MANAGEMENTFinancial managementName of the Student:Name of the University:Author Note:
2FINANCIAL MANAGEMENTTable of ContentsIntroduction......................................................................................................................................2Historical account of the development and application of Capital Asset Pricing Model inmanagerial finance...........................................................................................................................2Conclusion.......................................................................................................................................3Reference List..................................................................................................................................4
3FINANCIAL MANAGEMENTIntroductionThis study deals with understanding the concept of Capital Asset Pricing Model andpurpose of CAPM model in executive business. In this particular assignment, proper emphasishas been given on the theories of CAPM model and how it is helpful for the financial managers(Zabarankin, Pavlikov and Uryasev 2014). The current segment explains about historical accountof the progress as well as purpose of Capital Asset Pricing Model in supervisory business in themost appropriate way.“Historical account of the development and application of Capital Asset Pricing Model inmanagerial finance”Capital Asset Pricing Model is one of the asset pricing theories that estimate the cost ofcapital for business firm for the purpose of assessing the performance of managed portfolios.This particular pricing model offers powerful as well as pleasing predictions on matters relatingto risk measurement and the relation between expected return and risk (Moosa 2013). Theempirical problems of CAPM model show theoretical failings those results to get simplifiedassumptions. Capital Asset Pricing Model is used for describing the relationship between risk aswell as return in the most appropriate way. CAPM can be used for pricing of risk securities andthis model was introduced in the year 1964 as an extension of the Modern Portfolio Theory(Barberiset al.2015). In addition, the theories explore ways where investors need to constructportfolios that have minimal risk levels for maximizing returns. This pricing model is used byfinancial professionals for calculating the required return that is based on risk measurement. The
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