Capital Market Theory in Bangladesh

heavy(p) Market supposition: It is the extension of the portfolio theory. That is a keen grocery theory is based on the assumption of the portfolio theory. It is utilise to devise a computer simulation for pricing all wondering(a) assets. This model is called the jacket crown asset pricing model which is use to determine the mandatory deem of return from every perilous assets. There ar various assumptions of Capital Asset determine Model. Some are realistic and some are not. Assumptions of Capital Market Theory: 1. every investors are Markowitz efficient investors who pauperization to target points on efficient marge. The exact location on the efficient frontier depends on the gamble-return utility function. 2.Investors can sorb or tingle in any amount of capital at the gamble free rate of return. It is always accomplishable to lend money at the risk free rate by purchasing risk free securities such as authorities bonds, treasury bills. besides it is n ot always possible to usurp at the risk free rate. However, a higher acquire rate does not affect much the results of the model. 3.All the investors pass water unvarying expectations that is they estimate identical probability distribution for rising judge of return. But if there are differences in evaluate returns, their make on the model results are not significant. 4.

All the investors chew up the same one period time horizon. But the model will be developed for a genius divinatory period. If enthronisation periods for investments are different, they would require to measure the risk for investment p eriod. They would also require to indentify ! risk free assets that are unvarying with the risk free period. 5.All investments are incessantly divisible, which means that it is possible to buy or sell any fractional shares of assets or portfolio assets. 6.There are no taxes or transaction costs relate in buying or selling assets. This is a valid assumption in umpteen instances. For example neither subsidy funds nor religious groups have to pay taxes and the transaction cost...If you loss to get a panoptic essay, order it on our website: OrderCustomPaper.com

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