Assignment:
CAPM is a model that describes the relationship between risk and expected return and that is used in the pricing of risky securities (https://www.investopedia.com/terms/c/capm.asp). The general idea behind CAPM is that investors need to be compensated in two ways: time value of money and risk .
https://www.investopedia.com/terms/c/capm.asp).
For this assignment we are going to explore CAPM in more detail. Read the article "Should managers estimate cost of equity using a two-factor international CAPM?" by Dolde, W., Giaccotto, C., Mishra, D. R., & O'Brien, T. After reading the article and doing additional research, please respond to the following questions:
Q1. What is CAPM? How is it used?
Q2. What are the advantages and disadvantages of CAPM?
Q3. What were the empirical findings of the study?
Q4. Why do they believe their findings are beneficial to U.S. managers?
Q5. Discuss what the authors found with regard to cost of equity difference for industries. Is one industry more susceptible than others?
Your answer must be typed, double-spaced, Times New Roman font (size 12), one-inch margins on all sides, APA format.