The Capital Asset Pricing Model

1 Capital asset pricing model CAPM is one of the most influential theories in the financial sector and is widely used in applications (such as estimating corporate capital costs). At the same time, CAPM is probably the most tested model. The strength of CAPM is its simplicity and elegance in establishing a linear relationship between risk and reward. CAPM indicates that investors need to bear additional risks if they want to achieve higher expected returns. It is derived based on the average method first proposed by Markowitz (1959).

Sabal (2001) provides four models to calculate capital costs in companies in emerging countries, namely the International Capital Asset Price Model (ICAPM), Improved International Capital Asset Price Model (MICAPM), Godfrey and Espinosa (1996) doing. Model and Arbitrage Transaction Price Theory (APT) ICAPM and MICAPM can not be used because they need to list the company's shares, but the shares of Paginas Amarelas are not traded as they are part of a large complex. Therefore, it is impossible to determine meaningful β for Paginas Amarelas required for meaningful ICAPM and MICAPM. Due to lack of trading and inefficiency of capital markets, the revenue required in the regional market may be inaccurate. Another reason why ICAPM can not be used is because it assumes that the market is fully integrated so that the same revenue must be obtained for assets of the same risk.

Since 1970, finance companies have used the capital asset pricing model (CAPM) to calculate their portfolio performance and capital cost. However, there are many models of asset pricing that must identify the risk of assets, and many researchers have found that Mossin (1966), Sharp (1964), Sharp (1964), Lintner (1965) We measure the risk premium of each unit in the whole asset and calculate the asset risk by measuring the average of market beta. Therefore, the CAPM module has a linear relationship between the market beta and the risk premium of the asset, which can be considered a systematic risk. In addition, CAPM shows that the asset return rate varies depending on the asset market beta. (Fazil, 2007)

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?