# Capital Asset Pricing Model (CAPM) & Discounted Cash Flow (DCF)

Not what you're looking for?

Why does the Capital Asset Pricing Model (CAPM) give a different result than Discounted Cash Flow (DCF)? Please fully explain this as I understand both CAPM and DCF, but am not sure how to put it into words.

##### Purchase this Solution

##### Solution Summary

Here is just a sample of what you'll find in this solution:

"Discounted Cash Flow Method is one standard way of determining the cost of equity. This method assumes that a firm's current stock price is equal to the present (that is, discounted) value of all expected future dividends from the investment."

##### Solution Preview

Capital asset pricing models are mathematical formulas designed to quantify the trade-off between risk and return. Methods based on the CAPM are sometimes referred to as "risk premium" methods because the model provides an estimate of the risk premium associated with investing in specific issues of common stock. Therefore, CAPM based on the estimated market performance and the risk free rate, which are both ...

##### Purchase this Solution

##### Free BrainMass Quizzes

##### Basic Social Media Concepts

The quiz will test your knowledge on basic social media concepts.

##### Business Ethics Awareness Strategy

This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.

##### Change and Resistance within Organizations

This quiz intended to help students understand change and resistance in organizations

##### Social Media: Pinterest

This quiz introduces basic concepts of Pinterest social media

##### Team Development Strategies

This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.