Capital asset pricing model


 

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Capital asset pricing model

A model for generating expected equity returns. It is based on the premise that returns are the reward for taking on risk, and that risk can be split into two types: stock-specific risk and market risk.Since stock-specific risk can be mitigated by diversification policies, investors should not be compensated for taking this on. Expected returns should only be a function of the share's response to returns on the market as a whole, which is given by the share's beta.



Similar Matches

International Asset Pricing Model (IAPM)

International Asset Pricing Model (IAPM)

The international version of the CAPM assuming that investors in each country share the same consumption basket and purchasing power parity holds.


Indication pricing schedule

Indication pricing schedule

A statement of rates for an interest rate or currency swap.


Asset pricing model

Asset pricing model

A model for determining the required or expected rate of return on an asset. Related: Capital asset pricing model and arbitrage pricing theory.


Underpricing

Underpricing

Issuing securities at less than their market value.


Pricing to market

Pricing to market

The practice of an exporting firm holding fixed (or not fully adjusting) the price it charges in the export market when its costs or exchange rate change. See pass-through. Seminal treatment was Krugman (1987).


Further Suggestions

Repricing
forward pricing
Capital asset pricing model (CAPM)
Binomial option pricing model
Arbitrage free option pricing models
Transfer pricing
Pricing efficiency
Forward pricing
Garman Kohlhagen option pricing model
Two state option pricing model
Regulatory pricing risk
Administrative pricing rules
Option Pricing Curve


 
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