What is the CAPM and of what practical use is it Essay - 3

What is the CAPM and of what practical use is it - Essay Example According to CAPM, the expected return of a portfolio or a security is considered to be equal to the rate of a risk free security plus a premium for the risk factor. The risk factor is mainly calculated by taking a measure of risk called as beta in the model of CAPM. Beta is considered to compare the returns on a particular security to the market return. The formula for the CAPM is as follows: The development of the CAPM was mostly to explain the pricing of risky securities in the market. It is considered as a more practical approach to stock valuation as compared to the Markowitz theory which is considered to be more theoretical (Armitage, 2005, p. 51). The assumptions of the Capital Asset Pricing Model are as follows: I) It is considered that investors in general tend to maximize the utility of their wealth. The preferences of investors are taken into consideration through the concept of utility in the CAPM. Investors considered to be more willing to take risks are considered to have increasing marginal utility with regard to wealth while investors who are considered to be risk averse tend to have less preference for incremental wealth when it is considered to be associated with higher risk. II) It is considered that investors in general show similar expectations with regard to return and risk. It is considered in this regard that if investors do not have similar expectations, there will be no homogeneity in the conceptions of investors and as such no single efficient frontier line will apply to all investors. III) It is held that investors tend to make investment decisions on a rational basis depending on their preference for return and risk. Risk is considered to be mainly measured by two factors such as variance and mean. CAPM is considered to assume that rational investors tend to diversify away unsystematic

The Museum of London Essay Example | Topics and Well Written Essays - 1250 words

The Museum of London - Essay Example Many items were drawn into the museum between the 18th and the 19th century. Due to all these, the museum holds the most important historic collections in Britain. The government of the United Kingdom commissioned draughts men who had accurate skills in recording to operate the museum. Currently the museum of London has more than five thousand historical objects from the society’s collection that are documented. The database includes over more than three thousand items, which are digitized, and made available on their website. Inside the museum, there are historic objects that tell of a turbulent past of the country. The museum has intensified remains of the city whose dates reflect the times of the Roman Empire. In the London museum, one can discover the pre history of Britain and acquire knowledge on evolution of Britain from the time of the Roman Empire. The museum has the grandeur of medieval London and explores on the effects of the civil war, the plague, and the fires on the capital of United Kingdom (Humphrey, 2003:198). Some of the objects in the London museum were first shown to the natives of the country but now form part of the national museum. Other outstanding objects are missing in the museums record but the unique silver hanging bowl represents them all. The objects in the London museum range from the pre historic weapons and tools, the medieval pottery, woodblocks, and the bookbinding tools used by William Morris. There is also in the museum the clock made by Jacob Zech in Prague in the sixteenth century. The museum opts to expand the catalogue further in the future to cater for the emerging demands. Apart from all these the museum has also a hackney carriage, complete with a speaking tube that connects the museum guide to the audience or visitors for descriptive explanation incase of a stranger or tourist. The system has the ability to tune to any language to favor the visitor (Humphrey, 2003:204). The museums managing director, David Sp ence said that the present generation would shape the future of the museum. The museum is currently investigating the possibility of presenting more historic objects, which are currently present in other national museums. The Guildhall, which is the Faversham’s third best, was built on 1547 as a market hall by the efforts of the people of the town. The Guildhall is an open floor arcade provided to cover the interest of market traders as well as the customers. A popular building formula was common on the south east of England. The Guildhall was set on fire on 1814 as wellington was celebrating victory over the Napoleonic wars local yobs. The upper part of the hall had to be rebuilt. The facilitators took this opportunity to extend the hall by two bays to the north (Humphrey, 2003:212). The general outline of the hall remained the same but the designer worked in the then prevailing idiom and made it an arcade. The present elegancy of the Guildhall owes to the simplicity and goo d proportioning of flanks. Some of its windows are blind and solely reveal what would be monotony. A cornice neatly binds the hall to the tower and a continuous parapet that hides the low-pitched slate roof. The hall also has a fine Venetian window at the northern side end. Faversham is the only town in the whole of Europe that enjoys this service. St Bartholomew the great is an Anglican church