|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategic
decisions & Working Capital (WC)
|
|
|
|
|
|
|
Investment
decisions |
|
|
Modes of diversification
: |
|
|
Inter-Organizational relationships
: |
|
|
|
|
|
Others : |
|
|
|
|
|
Long-Term
Financial decisions |
|
|
|
|
|
|
|
Investment
analysis and decision |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THE SECURITY
MARKET LINE (SML)
Firms |
ß |
R f |
R m |
CAPM= SML |
| |
0.00 |
1.67% |
10.42% |
1.67% |
| |
0.10 |
1.67% |
10.42% |
2.55% |
| |
0.20 |
1.67% |
10.42% |
3.42% |
| |
0.30 |
1.67% |
10.42% |
4.30% |
| |
0.40 |
1.67% |
10.42% |
5.17% |
| |
0.50 |
1.67% |
10.42% |
6.05% |
| |
0.60 |
1.67% |
10.42% |
6.92% |
A |
0.70 |
1.67% |
10.42% |
7.80% |
M |
0.80 |
1.67% |
10.42% |
8.67% |
C |
0.90 |
1.67% |
10.42% |
9.55% |
Market |
1.00 |
1.67% |
10.42% |
10.42% |
D |
1.10 |
1.67% |
10.42% |
11.30% |
| |
1.20 |
1.67% |
10.42% |
12.17% |
E |
1.30 |
1.67% |
10.42% |
13.05% |
| |
1.40 |
1.67% |
10.42% |
13.92% |
F |
1.50 |
1.67% |
10.42% |
14.80% |
| |
1.60 |
1.67% |
10.42% |
15.67% |
| |
1.70 |
1.67% |
10.42% |
16.55% |
An example of Portofolio
Firms |
Allocation of funds |
Expected Return |
Betas |
Risk Premium |
A |
15.0% |
7.80% |
0.70 |
6.13% |
M |
20.0% |
8.67% |
0.80 |
7.00% |
C |
18.0% |
9.55% |
0.90 |
7.88% |
D |
22.0% |
11.30% |
1.10 |
9.63% |
E |
15.0% |
13.05% |
1.30 |
11.38% |
F |
10.0% |
14.80% |
1.50 |
13.13% |
Portfolio |
100.0% |
10.54% |
1.01 |
8.87% |
Market |
100.0% |
10.42% |
1.00 |
8.75% |
Corporate
Finance Course, Bernard Jaquier, Professor
in Economics & Finance, Ecole Hôtelière
de Lausanne, 2011
|
|
|
