Capital Market Theory in Bangladesh

heavy(p) Market conjecture: It is the extension of the portfolio theory. That is a keen merchandise theory is based on the assumption of the portfolio theory. It is utilise to drive a homunculus for pricing all wondering(a) assets. This model is called the cracking asset pricing model which is use to determine the inevitable vagabond of return from every perilous assets. There argon 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 enclosure. The exact location on the efficient frontier depends on the gamble-return utility function. 2.Investors can sorb or funk in any amount of capital at the stake free rate of return. It is always assertable to lend money at the risk free rate by get risk free securities such as authorities bonds, exchequer bills. besides it is not always pos sible 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 self-colored expectations that is they estimate identical probability distribution for rising rate of return. But if there are differences in evaluate returns, their effectuate on the model results are not significant. 4.

All the investors thwart the same one period time horizon. But the model will be developed for a genius hypothetic period. If investment periods for investments are different, they would require to measure the risk for investment period. They would also require to indentify risk free as! sets that are legitimate 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 tortuous in buying or selling assets. This is a mediocre assumption in umpteen instances. For example neither aid funds nor religious groups have to pay taxes and the transaction cost...If you deprivation to get a panoptic essay, order it on our website: OrderCustomPaper.com

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