GB550 Financial Management

GB550 Financial Management

GB550 Financial Management
Topic 2: The Asset Pricing Model

Research and define Capital Asset Pricing Model (CAPM) and Arbitrage Pricing Theory (APT). How are they the same and how are they different?

GB550 Financial Management Unit 4 Discussion 1

Capital budgeting is a vital part of a firm’s decision making. Each approach will provide a piece of information to help analyze potential projects to make informed decisions.

Topic 1: Capital Budgeting

From a financial manager’s perspective, discuss the capital-budgeting process used to identify projects that add to the firm’s value. How do capital-budgeting decisions help to define a firm’s strategic direction?

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The Asset Pricing Model
The capital asset pricing model
The Capital asset pricing model describes the relationship between the rate of return and the systematic risk of an asset. In the field of finance, it is used to price risky securities in a company and the generation of their expected returns. According to the model, the value of the assets increases in value depending on their level of risk (Zabarankin, Pavlikov & Uryasev, 2014).

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