What are the main features of the Capital Asset Pricing Model and how is it used to understand the value of a firm's security holdings.

 

You're expected to address this issue in the following areas:

(1) What is CAPM and its basic formula?

(2) What are the features of CAPM?

(3) Comments/criticisms on CAPM?

 

Question 2:

Critically compare and discuss the NPV and IRR techniques from the following areas:

 

a. Discuss theoretical and practical strengths and weaknesses of each                                                                               b. The issue of conflicting rankings with the use of NPV and IRR

c. Which approach is better in appraising capital investments? Why?

 

Question 3:

Discuss the main features of the Modigliani and Miller's 1958 Theorem and its uses in terms of capital structure and cost of capital.
 

Question 4: 

a. Discuss with graphs about three general shapes of yield curve. 

b. Discuss the following theories that can explain the general shapes of yield curve:

1.expectation theory

1. 2. liquidity preference theory
2. 
   
3. 3. market segmentation theory