Tuesday, 3 November 2015

Advantages of Capital Asset Pricing

Advantages of Capital Asset Pricing

Advantages of risk & reward, cost of capital calculation,

1.    Risk & Rearward Relationship

CAPM beautifully explain the relationship between risk and reward. CAPM explain that why market security claim high return (systematic risk).

2.    Effective Tool of Cost of Capital

CAPM is effective tool for calculating cost of capital.