What is CAPM (Capital Assets Pricing Model) and how do companies make financial decisions based on it?
CAPM model is a method of calculating the required rate of
Equity.
CAPM = Risk Free rate + Beta *(Market Return - Risk Free
rate)
Companies use CAPM to calculate the required rate of Capital for
calculation of the intrinsic value of firm, it is used in capital
budgeting regarding selecting or rejecting any project.
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What is CAPM (Capital Assets Pricing Model) and how do companies make financial decisions based on...
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In at least 200 words, what is Capital Asset Pricing Model (CAPM), how and why is it used. and why is it important?
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