Explore BrainMass
Share

Explore BrainMass

    CAPM, SML, and Investors

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    The Capital Asset Pricing Model (CAPM) is a widely used concept in finance. The model is expressed graphically by the Security Market Line (SML). Within the context of investment, explain how CAPM can be useful to investors.

    © BrainMass Inc. brainmass.com October 10, 2019, 7:38 am ad1c9bdddf
    https://brainmass.com/business/capital-asset-pricing-model/capm-sml-investors-589235

    Solution Summary

    This solution explains the components of the Capital Asset Pricing Model (CAPM) and graphically illustrates the components in a Security Market Line (SML). The solution also shows the computation using a simple example. Finally, a short discussion on investor approach to CAPM is included.

    $2.19