Capital Asset Pricing Modfel slp Assignment Example | Topics and Well Written Essays - 500 words

Capital Asset Pricing Modfel slp - Assignment Example However, in the CAPM (capital asset pricing model), beta risk denotes the only type of risk for which an investor should receive an expected return that is greater than the risk-free rate of interest (Ehrhardt & Brigham, (2009). The estimated beta coefficient of Apple Inc. is 1.25. A beta of higher than one generally implies that the price of stock of such a company is both more volatile and tends to move up and down with the market. For instance, like in the case of Apple Inc. A stock’s beta of 1.25, theoretically implies that the security is 25 percent more volatile than the market. Such stock is riskier than the market. Even though it poses more risk, the stock should be included in the overall portfolio because it offers the possibility of a greater rate of return. This is so because a beta value of 1.25 indicates that the security is anticipated to do 25% better than the S&P 500 within an up market. This stock should be included in the portfolio to help diversify it due to its high risk-reward ratios (Bradfield, 2007). Capital Asset Pricing Model (CAPM) refers to an economic model that is used to value securities, stocks, assets or derivatives by relating risk and expected return. It is based on the principle that investors demand a risk premium, additional expected return, in case they are required to accept additional risk. CAPM is, therefore, used in pricing stocks or securities (Ehrhardt & Brigham, (2009). Cost of equity or expected rate of return refers to the rate of return that an investor requires before being interested in any given investment at a particular price. It is the rate of return that compensates them for a higher expected risk (Reilly & Brown, 2012). The portfolio is sufficiently diversified; because it has a beat of less than one meaning the assets move in the same direction however the movement is less than that of the benchmark hence less susceptible to everyday fluctuation (Bradfield,

Terrorism Assignment Example | Topics and Well Written Essays - 500 words - 1

Terrorism - Assignment Example Due to the consequences attached with terrorism, one can understand that mankind has suffered on nearly all counts. If suffering is the barometer of finding out how terrorism will be defined and described, then one can suggest different implications all the same. It is not surprising that ever since recorded history, terrorism has been hard to define. It is both a strategic tool and a tactical entity, whereby the some believe it as a holy duty while others as a crime in its most rigorous form. Some believe it is the best deterrent to oppression and thus stands as a justifiable excuse in the wake of changing times. Then there are others who believe in creating destruction within the society to meet some of their ulterior motives whilst indulging in terrorism and its related activities. This indeed is a state of mind which comes directly linked with terrorism. It remains a reality that terrorism is a crime which influences an audience apart from the victim that is apparent. The basic strategy of terrorism is to commit to those acts which come under the domains of violence and thus grab the attention and feedback of the population which is affected by the same. Often times, it has been seen that the local population is indeed the government of the land or even the entire world. The terrorists carry out the terrorism related activities to let the people know that a lot of ambiguity exists within the relevant ranks, and thus anarchy has started to come up as a major force. The manner in which the terrorism event takes place decides whether or not it has been instrumental at changing beliefs or aligning ideologies. These are some of the basic reasons why terrorism is seen as something that is hard to define and describe because it affects quite a few tangents in the long term scheme of things. The three different perspectives in the wake of t he phenomenon of terrorism offer something of insight to gain from. This encompasses the stance of the