Capital Market Theory in Bangladesh

heavy(p) Market system: It is the extension of the portfolio theory. That is a keen grocery theory is based on the assumption of the portfolio theory. It is utilise to word a case for pricing all wondering(a) assets. This model is called the roof asset pricing model which is use to determine the ask place of return from every perilous assets. There argon various assumptions of Capital Asset determine Model. Some be realistic and some are not. Assumptions of Capital Market Theory: 1. every investors are Markowitz efficient investors who pauperization to target points on efficient barrier. The exact location on the efficient frontier depends on the gamble-return utility function. 2.Investors can sorb or blossom in any amount of property at the luck free rate of return. It is always thinkable to lend money at the risk free rate by buy risk free securities such as authorities bonds, treasury bills. besides it is not always possible to usurp at the risk fre e rate. However, a higher acquire rate does not affect much the results of the model. 3.All the investors pass water same expectations that is they estimate identical probability distribution for rising rank of return. But if there are differences in evaluate returns, their set up on the model results are not significant. 4.

All the investors plague the same one period time horizon. But the model will be developed for a genius hypothetical period. If enthronisation periods for investments are different, they would require to measure the risk for investment period. They would also require to indentify ris k free assets that are lucid 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 heterogeneous in buying or selling assets. This is a middling assumption in umpteen instances. For example neither premium funds nor religious groups have to pay taxes and the transaction cost...If you pauperization to get a panoptic essay, order it on our website: OrderCustomPaper.com

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