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Strategic
decisions & Working Capital (WC)
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Investment
decisions |
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Modes of diversification
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Inter-Organizational relationships
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Others : |
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Long-Term
Financial decisions |
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Investment
analysis and decision |
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THE SECURITY
MARKET LINE (SML)
Firms |
β |
R f |
R m |
CAPM= SML |
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0,00 |
1,565% |
8,468% |
1,57% |
|
0,10 |
1,565% |
8,468% |
2,26% |
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0,20 |
1,565% |
8,468% |
2,95% |
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0,30 |
1,565% |
8,468% |
3,64% |
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0,40 |
1,565% |
8,468% |
4,33% |
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0,50 |
1,565% |
8,468% |
5,02% |
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0,60 |
1,565% |
8,468% |
5,71% |
A |
0,70 |
1,565% |
8,468% |
6,40% |
M |
0,80 |
1,565% |
8,468% |
7,09% |
C |
0,90 |
1,565% |
8,468% |
7,78% |
Market |
1,00 |
1,565% |
8,468% |
8,468% |
D |
1,10 |
1,565% |
8,468% |
9,16% |
|
1,20 |
1,565% |
8,468% |
9,85% |
E |
1,30 |
1,565% |
8,468% |
10,54% |
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1,40 |
1,565% |
8,468% |
11,23% |
F |
1,50 |
1,565% |
8,468% |
11,92% |
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1,60 |
1,565% |
8,468% |
12,61% |
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1,70 |
1,565% |
8,468% |
13,30% |
Example of Portofolio
Firms |
Allocation of funds |
Expected Return |
Betas |
Risk Premium |
A |
15,0% |
6,40% |
0,70 |
4,83% |
M |
20,0% |
7,09% |
0,80 |
5,52% |
C |
18,0% |
7,78% |
0,90 |
6,21% |
D |
22,0% |
9,16% |
1,10 |
7,59% |
E |
15,0% |
10,54% |
1,30 |
8,97% |
F |
10,0% |
11,92% |
1,50 |
10,35% |
Portfolio |
100,0% |
8,56% |
1,01 |
7,00% |
Market |
100,0% |
8,468% |
1,00 |
6,903% |
(c) ECOFINE.COM, Bernard Jaquier, Professor Emeritus & Dr Honoris Causa, Lausanne, Switzerland, 2023
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