Capital Asset Pricing Model in building investment portfolio
Do, Trung (2014)
Do, Trung
Lahden ammattikorkeakoulu
2014
All rights reserved
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-2014112516780
https://urn.fi/URN:NBN:fi:amk-2014112516780
Tiivistelmä
Investing is one of the most interesting subjects for businesses and individuals. In investment finance, stock is a financial instrument that has been giving investors the highest return in comparison with others. However, it is also considered as the riskiest asset in investment. Therefore, investors need to fully understand the characteristics of stocks as well as approaches to trading.
The author was inspired from one of the greatest investors Warren Buffett, and this study was made in order to help him as well as investors, to understand the basics of investing. The thesis consists of three main ideas: risks and returns in investment, the diversification principle and the capital asset pricing model. Following that is a study which proved the diversification effect and also found the optimal portfolio for investors using efficient frontier and capital market line – two key relationships in capital asset pricing model. In the empirical study, random stocks were chosen in order to test the hypotheses.
This study applied the deductive approach and quantitative research method. Also, a variety of sources were utilized, from published books to trusted internet sources, to provide knowledge and also clarify the subjects. The structure started from basics into details and more complicated matters. Hence, it is crucial that readers need to understand these from chapter to chapter.
However, the author reminds the readers that this study is only an approach and it is always different from theories to practices. Thus, investing in stocks requires responsibility.
The author was inspired from one of the greatest investors Warren Buffett, and this study was made in order to help him as well as investors, to understand the basics of investing. The thesis consists of three main ideas: risks and returns in investment, the diversification principle and the capital asset pricing model. Following that is a study which proved the diversification effect and also found the optimal portfolio for investors using efficient frontier and capital market line – two key relationships in capital asset pricing model. In the empirical study, random stocks were chosen in order to test the hypotheses.
This study applied the deductive approach and quantitative research method. Also, a variety of sources were utilized, from published books to trusted internet sources, to provide knowledge and also clarify the subjects. The structure started from basics into details and more complicated matters. Hence, it is crucial that readers need to understand these from chapter to chapter.
However, the author reminds the readers that this study is only an approach and it is always different from theories to practices. Thus, investing in stocks requires responsibility.