After reading this article you will learn about the Valuation of Securities:- 1. Debenture Valuation 2. Share Valuation 3. Equity Share Valuation. Debenture Valuation: A bond is an instrument of debt issued by a business house or a government unit. The bonds may be issued at par, premium or discount. The par value is the amount stated on the face [...]
This article throws light upon the four main sections of risk and return relationship. The sections are: 1. Risk and Return of a Single Asset 2. Risk and Return of a Portfolio 3. Capital Asset Pricing Model (CAPM) 4. Arbitrage Pricing Theory. Section # 1. Risk and Return of a Single Asset: Return on Investment: Return from a venture is [...]
This article throws light upon the top four asset pricing implications of CAPM. 1. The CAPM has asset pricing implications because it tells what required rate of return should be used to find the present value of an asset with any particular level of systematic risk (beta). In equilibrium, every asset's expected return and systematic risk coefficient should plot as [...]