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Critically examine the Capital Asset Pricing Model (CAPM) of portfolio management.                            &nbsp

Critically examine the Capital Asset Pricing Model (CAPM) of portfolio management.                                                  

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Capital Asset pricing model is used for calculation of the expected rate of return from a Portfolio in the market.

Capital Asset pricing model has mainly four components of calculation of the expected rate of return so it will be focused at finding out the risk free rate and it will also be finding out market rate of return.Capital Asset pricing model will be focused at finding out the systematic risk of a Portfolio through analysis of Beta and it would also be focused out at finding out a market premium which is the difference between the risk free rate and the market rate of interest.

So, this model of determination of expected rate of return is focused at finding out how much risk should investor take to make how much expected rate of return and it is also used as a comparable analysis for a Portfolio on risk adjusted return basis.

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