DATE of Presentation August25,2011

Topic NAME Capital Assets Pricing Model (CAPM)

Name & Roll No. of Presenters Name Roll No. Arun RQ2702A15 Sharma

Name & Roll No. of Rapotiers Name Roll No. Vikas RQ2702B33 Kumar

PART 1 REPORT Capital Asset Pricing Model (CAPM)

To determine required rate of return of an asset Model was introduced by Jack Treyor E[Ri] = RF + i (RM RF)
= 1

Average systematic risk

> 1

High systematic risk, more volatile than the market

< 1

Low systematic risk, less volatile than the market

Assumptions and Limitations

Are rational and risk-averse. Investors are ready to take risk if they earn more returns. Trade without transaction or taxation costs During trading and investing there will be known transaction cost.
Assume all information is available at the same time to all investors.

We assume that all the information available in the market disbursed to the investor at the same time.

PART 2 QUIZ Questions. Q1 what does CAPM stands for? Q2 who has introduced CAPM model? Q3 what is systematic risk? Q4 Assumptions for CAPM model? Q5 what happens when B=1 B>1 B<1