The objective of firms is to maximise the shareholders wealth. By doing so, management should make the best decisions for its financing and investing to create value in shareholders interest. Thus, the information pertaining to firms financial decisions should be incorporated into its stock price. As a junior fund manager, you are tasked to analyse the possible value of firms information in your investments.

a. if you believe Capital Asset Pricing Model (CAPM) is true on pricing the risky securities, what would be the impact of firms decisions on your investment value or strategy.