Application of Capital Asset Pricing Model in the function of determination of expected yield of companies in the capital markets Republic of Srpska
Journal Title: Acta Economica - Year 2016, Vol 14, Issue 24
Abstract
When is Harry Markowitz made the first foundations of the development of portfolio theory, William Shape, John Lintner and Jan Mossion in the early 60s of the 20th century are developed a Capital Asset Pricing Model - CAPM. The first time it was presented by William Shape, publication work entitled „Capital asset prices: a theory of market equilibrium under conditions of risk”, which in 1990 won the Nobel Prize for economy. Capital Asset Pricing Model allows accurate prediction of the relationship between risk and yield adequate financial instrument. In developed market equity investors often used this model when calculating the expected return of the corresponding financial instrument. Also, the model can also be used for other purposes, and in order to facilitate the investors making important business decisions. Although the model is not empirically verified and it is the subject of critiques by some authors, its use is broad because of precise determination of risk and yield relation in financial instruments and his appropriate accuracy.
Authors and Affiliations
Драган Јањић
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- EP ID EP43831
- DOI https://doi.org/10.7251/ACE1624191J
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