capm

Understanding CAPM and Its Relevance to Real Investment DecisionsWhen it comes to making sound investment decisions, the Capital Asset Pricing Model (CAPM) plays a crucial role. CAPM is a financial model that helps investors assess the potential risks and returns associated with different investment opportunities. By understanding how CAPM works and its implications for real investment decisions, investors can make informed choices that maximize their chances of financial success.How CAPM WorksAt its core, CAPM is based on the concept of risk and return. It assumes that investors are risk-averse and require compensation for taking on additional risk. The model calculates…