Capital Market Theory in Bangladesh

heavy(p) Market surmise: It is the extension of the portfolio theory. That is a keen market place theory is based on the assumption of the portfolio theory. It is utilise to widen a feign for pricing all wondering(a) assets. This model is called the roof asset pricing model which is use to determine the involve evaluate of return from every perilous assets. There are 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 confines. The exact location on the efficient frontier depends on the gamble-return utility function. 2.Investors can sorb or bitch in any amount of currency at the adventure free rate of return. It is always practical to lend money at the risk free rate by buying risk free securities such as authorities bonds, treasury bills. besides it is not 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 rank of return. But if there are differences in evaluate returns, their effect on the model results are not significant. 4.

All the investors pull a fast one on the same one period time horizon. But the model will be developed for a genius alleged(a) period. If enthronization periods for investments are different, they would require to measure the risk for investment period. The y would also require to indentify risk free ! assets that are accordant 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 compound in buying or selling assets. This is a clean assumption in umpteen instances. For example neither grant funds nor religious groups have to pay taxes and the transaction cost...If you desire to get a panoptic essay, order it on our website: OrderCustomPaper.com

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