When your small business generates excess cash, you should put that cash to work. If you look at the stock market as a place to put your cash, you need to analyze the potential for creating income or ...

CAPM calculates expected stock returns using the risk-free rate, stock beta, and market return. The riskier the stock, the higher the return investors should demand. CAPM aids in investment analysis ...

Mullins, David W., Jr. "Diversification, the Capital Asset Pricing Model, and the Cost of Equity Capital." Harvard Business School Background Note 276-183, March 1976. (Revised November 1993.) ...

One of the key insights of the CAPM is that it answers an important investment question: "What is the expected return if I purchase security XYZ?" The assumption that Sharpe built into the model is ...

Steven Nickolas is a writer and has 10+ years of experience working as a consultant to retail and institutional investors. Thomas J. Brock is a CFA and CPA with more than 20 years of experience in ...

Financial economic theory dictates that rational investors should diversify their portfolios in order to minimize exposure to risk. Integral to this theory is the way in which markets value risk. The ...

The existing literature demonstrates that under a general equilibrium model, the performance of the Capital Asset Pricing Model (CAPM) can be improved significantly by using conditional consumption ...

The cost of equity and the cost of capital are key metrics in corporate finance that influence financial strategy and investment decisions. The cost of equity reflects the return shareholders expect, ...

The capital asset pricing model has been widely used for many years by the global financial services industry to try and predict the returns you should expect from a stock. If a stock offers a return ...