DEVELOPING THE INPUTSREQUIRED FOR APPLYING CAPM
Determinants   Risk Free of CAPM         TradeMarket Risk                 Beta Premium
DETERMINANTS OF CAPM                 Risk free       Market      rate        Risk      Premium                Beta      DE...
RISK FREE RATE
DETERMINANTS OF CAPM                    Free from                     Default                     Risk &                  ...
DETERMINANTS OF CAPM
MARKET RISK PREMIUM
DETERMINANTS OF CAPM
DETERMINANTS OF CAPM
BETA
DETERMINANTS OF CAPM The sensitivity of a security to the movement of  the market is measured by “Beta Coefficient(  )” ...
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Developing the inputs required for applying CAPM

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Developing the inputs required for applying CAPM

  1. 1. DEVELOPING THE INPUTSREQUIRED FOR APPLYING CAPM
  2. 2. Determinants Risk Free of CAPM TradeMarket Risk Beta Premium
  3. 3. DETERMINANTS OF CAPM Risk free Market rate Risk Premium Beta DETERMINATS
  4. 4. RISK FREE RATE
  5. 5. DETERMINANTS OF CAPM Free from Default Risk & Uncorrelat ed with returns Nature of Risk Free Rate Return on Structure Zero-Beta Construction Portfolio is is costly & Best complex Estimate
  6. 6. DETERMINANTS OF CAPM
  7. 7. MARKET RISK PREMIUM
  8. 8. DETERMINANTS OF CAPM
  9. 9. DETERMINANTS OF CAPM
  10. 10. BETA
  11. 11. DETERMINANTS OF CAPM The sensitivity of a security to the movement of the market is measured by “Beta Coefficient( )” Beta > 1.00 = aggressive security Beta < 1.00 = defensive security Beta of a portfolio is nothing but the weighted average of the beta’s of securities that constitute the portfolio, the weights being the proportion of investments in the respective securities.
  12. 12. THE END

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