Comparative Assessment of the Analytical Risk-Averse Premium Model and Its Risk and Returns: Critical Analysis of Capital Asset Pricing Model (CAMP)
Journal for Studies in Management and Planning, Vol. 1, No. 2, March 2015
12 Pages Posted: 7 May 2015
Date Written: November 6, 2014
This research study attempts to explain the risk and returns of Capital asset pricing model in stocks and investments scenario. In this present study, the model (CAPM) is validated both theoretically and empirically subsequently. Capital asset pricing model is one of the tools for investors to take a decision regarding their investments in various situations by offering risk adjusted returns. This paper creates a concrete underlying building blocks for an investor keeping in view the Modern Portfolio Theory and also the risk and return considerations. Beta is used to prioritize the understanding of different available funds in the market, fund strategies and also to identify instruments for the investors to diversify portfolios of investments. Finally readers would get the idea of how much exactly the investor would get return in order to put his investment in a riskier asset management company instead of a sovereign entity i.e. bank. This paper provides a general investment opportunities for investors not only in order to quantify the risk but also explaining the best risk adjusted returns into estimates of equities expected return.
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