The Application of the capital asset pricing model (CAPM): A south african perspective

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dc.contributor.authorNel W.S.
dc.date.accessioned2011-10-13T16:59:31Z
dc.date.available2011-10-13T16:59:31Z
dc.date.issued2011
dc.description.abstractThe focus of this paper is the capital asset pricing model (CAPM), with a specific emphasis on two of its main components, namely the risk-free rate and beta. The CAPM is used extensively in practice to calculate the cost of equity, which, in turn, is used to calculate the weighted average cost of capital for equity valuation and investment appraisal purposes. The aim of this paper is to investigate how well valuation theory regarding the CAPM in particular, as advocated by academia, is aligned with the CAPM and alternative models that leading financial analysts and corporate financiers apply in practice. No study has yet compared the methods of choice of investment practitioners when calculating the cost of equity to that of academia. The research results revealed that, although both academia and investment practitioners favor the CAPM, they disagree significantly with regard to the components of the CAPM and the use of alternative models. ©2011 Academic Journals.
dc.description.versionArticle
dc.identifier.citationAfrican Journal of Business Management
dc.identifier.citation5
dc.identifier.citation13
dc.identifier.citationhttp://www.scopus.com/inward/record.url?eid=2-s2.0-79960516744&partnerID=40&md5=5729241d86e502cef768069487b38ebd
dc.identifier.issn19938233
dc.identifier.urihttp://hdl.handle.net/10019.1/17143
dc.titleThe Application of the capital asset pricing model (CAPM): A south african perspective
dc.typeArticle
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