Islamic Financing vs the Capital Asset Pricing Model (CAPM)

This research article describes two approaches. One is Islamic funding, and the other is the traditional capital asset price model (CAPM). Using direct Musaraka, Islamic financing methods apply to traditional funding methods by comparing them with each other. Comparing these two methods, several conclusions have been drawn; based on cooperation between Islamic finance and traditional markets, investment beta risk was found to be lower. The risk is not a risky return, but a share of lenders and others.

Financial theory provides various tools for evaluating the price of an asset. Among these tools, a tool called capital asset pricing model (CAPM) is very common and useful for financial analysis. Basically, this pricing model will fix the value of the asset to the present value of the sum of all cash flows that will be produced in the future. In most cases, this model is used to evaluate duties and inventory. When applied to Bitcoin, CAPM seems to indicate that the market price of Bitcoin is high. Bitcoin's future cash flow equals zero - mining income is usually expressed as Bitcoin's future cash flow, but they are the cost of Bitcoin holders. There is nothing else - and the present value per unit is about $ 12,200 and the market capitalization is $ 22.2 billion. However, since CAPM has more in common with commodities than shares and liabilities, please do not use it as a way of setting Bitcoin's price. Do you evaluate coal, gold, copper, euro using CAPM?

CAPM has various applications. Capital asset pricing model CAPM for decision making related to portfolio valuation, capital investment, financing, etc. determines capital cost of discounted future cash flows. CAPM also helps M & A, product portfolio and other risks. CAPM is always the most widely used method in the financial industry. Since the 1990s, CAPM has started calculating the discount rate after risk adjustment. This has greatly contributed to the capital budget. Because market risk premium is required to calculate capital budget, capital budget is important input information for all organizations in order to understand the capital cost of companies using CAPM. Currently, all MBA programs teach CAPM the calculation of capital cost. However, the classic way of capital budgeting is to use net present value (NPV).

In this course, you fully understand investment theory and corporate finance, including capital budget (net present value), capital asset pricing model (CAPM), and Modigliani-Miller theory (MM propositions I and II with or without tax) It is assumed that it is. BUFN 770 (International Investment) is not a prerequisite, but the use of BUFN 771 is a continuation of BUFN 770. Courses are guided by lectures and case studies. The next page will provide a theme plan and specified reading. In order to solve case studies, students must use case - based finance, statistics, or techniques as presented in this course. Encourage students to work in groups of up to 4 people