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I will pay for the following article The Relevance of the Capital Asset Pricing Model to a Company Seeking to Evaluate its Cost of Capital. The work is to be 4 pages with three to five sources, with i

I will pay for the following article The Relevance of the Capital Asset Pricing Model to a Company Seeking to Evaluate its Cost of Capital. The work is to be 4 pages with three to five sources, with in-text citations and a reference page. The Capital Asset Pricing Model was devised by William Sharpe to calculate as well as explain “…the expected rate of return on an asset … (that) …can be written as the risk-free rate of interest plus the asset’s normalized covariance with the market times the difference between markets expected the rate of return and the risk-free rate” (Milne, 1995, pp. 5-6). Under financial theory CAPM is a model that shows assets returns concerning principle in conjunction with econometric models (Milne, 1995, pp. 5-6), and is represented by the following formula (Burton, 1998, pp. 21-22):

CAPM is calculated using the beta as it provides a measurement of a stock's volatility in terms of its movement comparison with the overall stock market (Burton, 1998, pp. 21-22). The above means that when a company’s share price moves in tandem with the market, with the beta of a stock is represented by 1 and a 15% movement indicated as 1.5 (Burton, 1998, pp. 21-22). Foster (1986, p. 337) provides a summary of the two assumptions present in the Capital Asset Pricing Model as represented by “1. Two statistics, the mean and variance, are sufficient to describe investor preferences over the distribution of future returns on a portfolio. 2. Investors prefer higher expected returns to lower expected returns for a given level of portfolio variance, and prefer lower variance to higher variance of portfolio returns for a given level of expected returns".

Corporate finance managers utilize CAPM to determine the estimated discount rate that is connected to a project under consideration (Ferran, 1999, p. 12). In conjunction with the foregoing, CAPM is used as a means to measure the systematic risk present in equity investment projects (Megginson, 1997, Pp. 107-123).&nbsp.

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