FIN3 CASE, SLP, and Thread Discussion
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background.docx
Module 3 - Background
The Capital Asset Pricing Model
Required Reading
I personally recommend reading up on the basic concepts behind the Capital Asset Pricing Model first before worrying about the formula. But still many of you are eager to learn the formulas first, so here are a few links below. But don't fixate on the formulas, spend an equal if not greater amount of time reading up on the basic concepts:
Investopedia (n.d.). Capital Asset Pricing Model, retrieved from: http://www.investopedia.com/terms/c/capm.asp
MoneyChimp, (n.d.) CAPM calculator, retrieved from: http://www.moneychimp.com/articles/valuation/capm.htm
QFinance, (n.d.) Capital Asset Pricing Model, retrieved from: http://www.financepractitioner.com/asset-management-calculations/capital-asset-pricing-model
Value Based Management, (n.d.) Capital Asset Pricing Model, retrieved from: http://www.valuebasedmanagement.net/methods_capm.html
To gain a deeper understanding of the CAPM and associated concepts beyond just the formula, read:
Damodaran, A. (n.d). Picking the right projects: Investment analysis. Retrieved from:
http://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/inv.pdf
Risk and Return (1991). The Economist, 318, 72-73
This Article on Investment Analysis is a highly comprehensive overview on measuring risk and the use of the CAPM. This article is a good place to start because it will give you an idea of how the CAPM is used in the "real world" as well as demonstrate the basic concepts of this Module.
Financial Markets (2015) Pearson Learning Solution, New York
Managing Risk and Return (2015) Pearson Learning Solution, New York
Optional Reading
Financial Concepts: Capital Asset Pricing Model. (n.d.). Retrieved from http://www.investopedia.com/university/concepts/concepts8.asp
Teachmefinance.com. CAPM – The Capital Asset Pricing Model. Retrieved from http://www.teachmefinance.com/capm.html
Teachmefinance.com. The Security Market Line. Retrieved from http://teachmefinance.com/securitymarketline.html
Hamm, D. B. (2006). Managerial Finance: Chapter 13 – Return, Risk & the Security Market Line, OVU – Advance. Retrieved from http://web.ovc.edu/advance/hamm/fin13.ppt#1
Investopedia.com. The Capital Asset Pricing Model: An Overview. Retrieved from http://www.investopedia.com/articles/06/capm.asp
Investopedia.com. Financial Concepts: Capital Asset Pricing Model (CAPM). Retrieved from http://www.investopedia.com/university/concepts/concepts8.asp
