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ðī 3 Minutes! CAPM Finance and the Capital Asset Pricing Model Explained (Quick Overview)
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omg Wow! So easy clicked here https://www.youtube.com/watch?v=gzxKd2S2MdU for CAPM or Capital Asset Pricing Model
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Imagine you have a friend named Bob with his money safely deposited in a bank at a 5% interest rate per year and that you have a scary and risky company which also earns an average 5% profit for owners or investors per year. Can you convince Bob to withdraw his money from the bank and invest in your business? No way! If your business is riskier than the bank, then Bob would want an average return much bigger than 5%. Now what if…
Bob also has some money invested in the general stock market, which is kinda risky, but not as risky as your scary company… and he earns an average profit of 8% per year. Can you offer Bob also 8% to convince him to sell his stock market portfolio and invest in your company instead? Again, no way! If your company is riskier and scarier than the general stock market, then you would have to offer Bob an average return higher than 8%, to reward Bob for his higher risk. http://www.youtube.com/watch?v=gzxKd2S2MdU So the question now is… exactly how much average % return should you offer Bob, to make his investment worth his risk in your scary company? This % is called your \”cost of equity\”… and we calculate it using the CAPM or Capital Asset Pricing Model Formula. The Capital Asset Pricing Model or CAPM formula factors in Bob’s risk and return from his other investments, and then tells us how much Bob should reasonably expect from your riskier company. That’s why your \”cost of equity\” is also called your investor’s \”expected return.\” Would you like learn the CAPM with more analysis and detail as well as how to calculate it the EASY way? Check out my free stepbystep tutorial video and download my free cheatsheet on CAPM at MBAbullshit.com. See ya there!
āļāļēāļĢāļ§āļīāđāļāļĢāļēāļ°āļŦāđāļāđāļāļāļļāļ āļāļĢāļīāļĄāļēāļ āļāļģāđāļĢ
āļāļāļĨāļāļāļļāļ āļāļēāļĢāļāļīāļāļēāļĢāļāļēāđāļāļĢāļāļāļēāļĢāļĨāļāļāļļāļ āđāļāļĢāļ·āđāļāļāļĄāļ·āļāđāļĨāļ·āļāļāđāļāļĢāļāļāļēāļĢ NPV IRR MIRR PB PI āļāļ·āļāļāļ°āđāļĢ
āļāļēāļĢāļāļąāļāļāļēāļĢāļāļēāļĢāđāļāļīāļ āļāļēāļĢāļŦāļēāļāđāļē WACC āļāđāļāļāļļāļāđāļāļīāļāļāļļāļ
BUS6010 āđāļĻāļĢāļĐāļāļĻāļēāļŠāļāļĢāđ āļāļēāļĢāļŦāļēāļāļ§āļēāļĄāļŠāļąāļĄāļāļąāļāļāđāļāļāļ TP AP MP āļāļāļīāļāļēāļĒ Law of Diminishing Returns
Law of Diminishing Returns
āļāļāļāļĨāļāļāļāđāļāļāļĨāļāļāđāļāļĒāļāļāļĒāļĨāļ āļŦāļĢāļ·āļ Law of Diminishing Returns āļāļ·āļ āļāļēāļĢāļāļĩāđāđāļĄāļ·āđāļāđāļāļīāđāļĄāļāļĢāļąāļāļĒāļēāļāļĢāđāļāđāļēāđāļāđāļāļāļēāļĢāļāļĨāļīāļāđāļāļĢāļ°āļĒāļ°āđāļĢāļāļāļ°āļāļģāđāļŦāđāđāļāđāļāļĨāļāļĨāļīāļāļāļīāđāļĄāļĄāļēāļāļāļķāđāļ āđāļĨāļ°āđāļĄāļ·āđāļāđāļāļīāđāļĄāļāļĢāļąāļāļĒāļēāļāļĢāđāļāđāļĢāļ·āđāļāļĒāđāļāļāļāļķāļāļāļļāļāļŦāļāļķāđāļāļāļ°āđāļĄāđāļāļģāđāļŦāđāļāļĨāļāļĨāļīāļāđāļāļīāđāļĄāļāļķāđāļ āđāļĨāļ°āđāļāļĢāļ°āļĒāļ°āļŠāļļāļāļāđāļēāļĒāļāļēāļĢāđāļāļīāđāļĄāļāļĢāļąāļāļĒāļēāļāļĢāđāļāđāļēāđāļāļāļ°āļāļģāđāļŦāđāļāļĨāļāļĨāļīāļāļāļĩāđāđāļāđāļĨāļāļāđāļāļĒāļĨāļ
āļāļāļāļāļēāļāļāļēāļĢāļāļđāļŦāļąāļ§āļāđāļāļāļĩāđāđāļĨāđāļ§ āļāļļāļāļĒāļąāļāļŠāļēāļĄāļēāļĢāļāđāļāđāļēāļāļķāļāļāļāļ§āļīāļāļēāļĢāļāđāļāļĩāđ āļāļ·āđāļāđ āļāļĩāļāļĄāļēāļāļĄāļēāļĒāđāļāđāļāļĩāđāļāļĩāđ: āļāļđāļ§āļīāļāļĩāļāļ·āđāļāđTECHNOLOGY
