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Capital asset pricing model (CAPM) |
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Capital asset pricing model (CAPM)An economic theory that describes the relationship between risk and expected return, and serves as a model for the pricing of risky securities. The CAPM asserts that the only risk that is priced by rational investors is systematic risk, because that risk cannot be eliminated by diversification. The CAPM says that the expected return of a security or a portfolio is equal to the rate on a risk-free security plus a risk premium multiplied by the assets systematic risk. Theory was invented by William Sharpe (1964) and John Lintner (1965).Capital asset pricing model (CAPM) Similar MatchesCapital goodCapital goodA good, such as a machine, that, once in place, becomes part of the capital stock. Capital intensiveCapital intensiveUsed to describe industries that require large investments in capital assets to produce their goods, such as the automobile industry. These firms require large profit margins and/or low costs of borrowing to survive. Capital expenditureCapital expenditureThe cost of making improvements on a property. Morgan Stanley Capital International Emerging Markets Global IndexMorgan Stanley Capital International Emerging Markets Global IndexA market capitalization-weighted benchmark index made up of equities from 29 developing countries. Capital-usingCapital-usingA technological change or technological difference that is biased in favor of using more capital, compared to some definition of neutrality. Further SuggestionsCapital infusionCapital account Opportunity cost of capital Capital depreciation Venture Capital Capital loss Capital augmenting Long-term capital capital split capital investment trust Capital Assets Working capital Financial capital Capital outflow venture capital trust Capital appreciation Contributed capital Capital stock Capital-saving Capital account balance paid in capital Personal tax view (of capital structure) Capitalization rate Real capital Capital |
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