Capital Asset Pricing Model (CAPM)

Capital Asset Pricing Model (CAPM) is widely used throughout finance for pricing risky securities and generating expected returns for assets given the risk of those

assets and cost of capital. You are required to write a 3,500 (+/- 10%) word essay on the CAPM model. Your essay should include assumptions of CAPM, a detailed

explanation of the CAPM equation, problems with the CAPM model in practical application, efficient frontier along with a discussion of security market line. Please

ensure your essay follows a logical flow and format. Your work must include graphical analysis of CAPM as relevant. You are required to use academic resources and e-

library. Please do not cite Investopedia, Wikipedia and other unreliable websites. Please research from published academic journals and textbooks the access of which

is available to you.

Sample Solution