The Capital Asset Pricing Model

descriptionPublicationkeyboard_double_arrow_right Part of book or chapter of book , Other literature type 01 Jan 2018 English Publisher:Springer International Publishing

Authors: Nicholas L. Georgakopoulos;

doi: 10.1007/978-3-319-95372-4_5

The Capital Asset Pricing Model

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Abstract

The Capital Asset Pricing Model values risky assets. This chapter explores its foundations in diversification and its limits, the calculation of the sensitivity to movements of the market, i.e., beta, combines them into the CAPM, which relates beta as a measure of risk to expected returns, and reconciles it with the continued usage of price-to-earnings ratios.

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