Disscuss the relevance of the capital asset pricing model (CAPM) to a Essay - 1

Disscuss the relevance of the capital asset pricing model (CAPM) to a company seeking to evaluate its cost of capital - Essay Example The market risk or systematic risk is the unavoidable risk brought in by the economy wide perils (Brealy et al, 2005). The CAPM’s focus is on the method of measuring systematic risk and its effect on the required return and share prices. Though it was initially evolved for investment in equity, it is also used for evaluating company investments in capital projects now (Davis & Pain, 2002). Capital Asset Pricing Model (CAPM) attempts to bring out a linkage between risk and return for the assets (Gitman,2006). The CAPM is built on the premise that well diversified investors dominate the stock market and their paramount concern being the market risk. The assumption is plausible in a situation in which large institutions and small investors can diversify at a low cost (Brealy et al, 2007). The CAPM builds on the proposition that additional risk requires a higher return. This return has two components: (1) what may be earned on a risk-free asset, such as a U.S. Treasury bill, plus (2) a premium for bearing risk. Since unsystematic risk is reduced through diversification, a stock’s risk premium is the additional return required to bear the non-diversifiable, systematic risk associated with the stock (Mayo 2007). The key input for the CAPM is therefore the excess return of the market over the risk free rate, which is the market (equity) risk premium. The practice adopted commonly has been to apply the historical average return over a long period as a measure of what investors expect to earn. As a substitute for the market portfolio, a broad equity market index is applied. Ke is the cost of equity capital, Rf is the risk free rate of return usually measured by the rate of return on US treasury securities, Rm is the market return of a diversified portfolio and I is the Beta co-efficient of the firm’s portfolio. The beta coefficient shows the volatility of the stock relative to that of an average stock. If it is 0.5, it is half as

The Relationship of Terrorism and Drugs Essay -- Persuasive Argumentat

The Relationship of Terrorism and Drugs Terrorism has many and varied links to the drug trade. Terrorists may use drugs for funding of their cause; may include drugs as part of their cause, as in Peru; or terrorism may be the result of the drug trade, as it is in Columbia's Extraditables and Italy's mafia. With the many linkages between the two crimes it seems that to crackdown on one you must crackdown on the other. The ties between the two are such that enforcement of one will hurt the other, to stop terrorism it would be useful to stop it's funding, purpose, and cause. Drugs are a renewable resource, it?s relatively inexpensive to grow them in fertile soil. There is an enormous profit margin in the drug trade so to those, like terrorists, who are already outside the law, the lure of easy money is strong. Many groups engage in drug trafficking. A notable example is Fuerzas Armadas Revolutionarias de Columbia (FARC) in Columbia. FARC is the military wing of the Columbian Communist Party and has been established since 1966. FARC has ?cooperated with drug interests, offering protection in exchange for money to purchase weapons and supplies? (Henderson, 61). There are other examples throughout the golden triangle and golden crescent where drugs are big business. ?Drugs have become the principle currency for the purchase of weapons? (Jamieson, 72) and this is a problem. Countries then find themselves attacked on two fronts, by both terrorists and the illicit drugs used for funding. Drugs provide funds through more than cultivation. Various grou ps aid in drug trafficking and gain funding through services, not growing, ?Tamils also find employment as couriers...as a means of financing their independence struggle in... ...organized crime is still terrorism, although it?s directed and self-serving it has political aspects and still fits most definitions. In these brief examples we gain a sense that the war on drugs and the war on terrorism overlap. These two efforts have bonds that need to be explored. In order to effectively target terrorism you also need to address the drug trade that in various instances provides funding, purpose, or reason for the terrorism. Bibliography: Henderson, Harry. Terrorism. New York: Facts on File, Inc., 2001 Jamieson, Alison. Terrorism and Drug Trafficking in the 1990s. Dartmouth: Research Institute for the Study of Conflict and Terrorism, 1994 Palmer, David Scott. ?Peru, the Drug Business and Shining Path: Between Scylla and Charbydis Journal of Interamerican Studies and World Affairs. Vol. 34, No. 3. PP 65-88

Black People and Affirmative Action Essay

Please be advised that Assignment One on the printed Tutorial Letter 101/3/2013 on pages 12 – 14 has a number of both typographical and numerical mistakes. This happened as a result of a number of factors: the initial assignment reading was too costly for the Department to commission in terms of copyright and had to be retracted at the last minute. The reading on â€Å"Affirmative Action: a losing battle? † was then included but with an almost impossible deadline, which resulted in the errors reflected therein. This is regrettable and we apologise for any inconvenience this might have cost you. The corrected version of the assignment is on page 3 and is attached to this TL and again on my UNISA for your convenience. The marks are out of 100 marks – 50 for Section A and 50 marks for Section B. NB: Please note that the due date has not changed in any way (4 March 2013). 2 ENN103F/102 8. 4. 1. FIRST SEMESTER ASSIGNMENTS The purpose of this assignment is to teach you how to read an article and to critically engage in academic reading and reflecting on the material in an academic manner by answering the short paragraph questions provided as well as an essay. Assignment 01 will be marked fairly fully and sent back to you. Affirmative action: a losing battle? There are considerable reasons to suppose that this topic, which affects all citizens of South Africa, in particular, seems dated. In some instances it is a policy viewed with hostility as it is said to discriminate against sections of the population, yet in others it is seen as beneficial to women, black people and the disabled. Studies show that in many instances this form of historical redress has proven a hindrance to performance and makes the beneficiaries doubt their abilities when viewed by their superiors. This has a negative effect on an organization since the quality of work is seen as being sub-standard. Equally, there are significant indicators, both in industry and the private sector, that the opening up of previously closed avenues through the policy of affirmative action made companies perform better since the beneficiaries of such workplace selection viewed their work as a challenge. Where beneficiaries claim stigmatization by such a selection process, it means they prefer not to have been selected through such efforts. Either way, the battle seems to go on and on. In the light of this ongoing and divisive debate, the level of debate regarding the policy has not progressed further since comparative studies of the policy have not been seriously undertaken. There has been no systematic study of the developments in how the policy actually proves beneficial as a tool of redress. Part of the reason is that, firstly, there is a lack of monitoring of what goes on in organizations, and secondly, that the regulations are not strictly enforced. For instance, companies will usually ‘front’ a black person, a woman or a disabled person, as a chief executive officer and leave the matter of compliance as a secondary issue. Rarely do such companies face serious consequences even if they do business with the government. The question then is whether a time limit should be placed on the policy and Act or whether it should be declared unconstitutional. Consideration has not been taken, for instance, of measures used in other countries to actively promote privilege. Very few advocacy groups ever mention the Naturalization Act of 1790, the Homestead Act of 1862 or even the Federal Housing Administration Loan Program of the 1930s used by the government of the United States of America to promote racial preference; or that such Acts were also used as models for other racially divided societies. Advocacy groups for and against the policy and Act have routinely made it a point that the policy is unsettling, needless and discriminatory, on the one hand, while others argue forcefully that the amelioration of past injustices justifies its implementation. Whichever side is on the ascendancy cannot take the other side’s viewpoint, and in the end the past divisions are set to continue. 3 SECTION A: Short questions Answer the following questions in short paragraphs. Please note that each question will be marked out of 10 marks: 1. 2. 3. 4. 5. Is the affirmative action policy morally defensible? Explain. In your opinion, which country has successfully implemented the policy of affirmative action and why did it succeed? In your view, why did the South African government choose to implement the Affirmative Action policy and Act, and was it ever justifiable? Does the policy need to be discontinued after a certain length of time, and why? In your opinion, why is it that people from a different racial group are unemployable in certain sectors of the economy and not in others? [10 X 5 = 50] SECTION B: Essay Write an essay of approximately one and a half page on either of the questions below. Please note that each essay will be marked out of 50 marks: 1) Do you think cultivating an equal opportunity society has helped countries such as South Africa and America to move forward? In a carefully worded essay, show why this is the case or why it is not. OR 2) To what extent do you consider such a policy and act relevant to the needs of any society today? [50 marks] Best wishes The ENN103F Team 4.

Pre Class Assignment Stages Of Life - 1837 Words

Pre-Class Assignment: Stage in Life Erik Erikson was a psychoanalytic psychologist. If Freud emphasized the role of bioenergy factors in developmental psychology, then Erik Erikson appreciated the social actors with the development of human psychology. Erikson, like Freud, was largely concerned with how personality and behaviour is influenced after birth - not before birth - and especially during childhood. In the nature v nurture (genes v experience) debate, Erikson was firmly focused on nurture and experience. He divided the process of human development into eight stages. In each stage there is a central contradiction must be resolved in order to finish successfully coping with conflicts in the later stages. According to Erik Erikson, the circumstances surrounding a very strong influence in the development of the human personality. He stressed that one can only fully develop at a certain stage in terms of emotional, psychological, social, and if the previous period is not interrupted by the conflict. It is understandable that the conflict in one phase is resolved, human development to the next stage. If it is not resolved, he can retreat to the previous period. If this crisis is resolved, it will be a prerequisite for the development of individual psychology in the next stage. However, if people fail to resolve the conflict then this failure will cause confusion in the later stages of man. Erikson s great theory helps us know why life is a series of lessons andShow MoreRelatedPiaget And Vygotsky s Theory1400 Words   |  6 Pagestheories. In this assignment I will be comparing and contrasting their theories and relating this to my current personal experience of teaching and learning. 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