Project #156750 - Finance- CML&SML

Business Tutors

Subject Business
Due By (Pacific Time) 12/01/2016 12:00 am

Word Length: 1500 words +/- 10% 

You are required to answer the question below:

Compare the differences between Capital Market Line (CML) and Security Market Line (SML) and critically evaluate how investors could use them in making equity investment decisions. 

Additional Information: 

Your answer should demonstrate evidence of reading and research far beyond the material delivered in lectures. It is important that you draw on insights from relevant and appropriate academic papers, and references to all sources used MUST be included. A selection of selected readings to get you started is provided below.

 

Strongly suggested Reading:

Fama, E. F., & French, K. R. (2004). The capital asset pricing model: Theory and evidence. Journal of Economic Perspectives, 18, 25-46. 

Perold, A. F. (2004). The capital asset pricing model. The Journal of Economic Perspectives, 18(3), 3-24. 

Weston, J. F. (1973). Investment decisions using the capital asset pricing model. Financial Management, 25-33. 

Dempsey, M. (2013). The capital asset pricing model (CAPM): the history of a failed revolutionary idea in finance?. Abacus, 49(S1), 7-23. 

Brown, P., & Walter, T. (2013). The CAPM: theoretical validity, empirical intractability and practical applications. Abacus, 49(S1), 44-50. 

Da, Z., Guo, R. J., & Jagannathan, R. (2012). CAPM for estimating the cost of equity capital: Interpreting the empirical evidence. Journal of Financial Economics, 103(1), 204-220. 

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