Capital Asset Pricing Model Historical Account of CAPM - 1375 Words

Capital Asset Pricing Model: Historical Account of CAPM (Essay Sample) Content: CAPITAL ASSET PRICING MODELStudents NameCourseProfessors NameUniversityCity (Sate)DateIntroductionThe concept of risk and returns was not fundamental until the later 1960s when the first Capital Asset Pricing Model was developed. Measuring risk is an imperative practice especially for investors whose returns are coupled with economic and business uncertainties. To create investors confidence, the incorporation of risks in the computation of risk-adjusted returns has been the major focus for companies. Therefore, entities have invested efforts hugely in managing their internal operations to ensure that they report positive cash flows by mitigating or minimizing business risks. Importantly, the rising concerns on business risks is due to the fact that they are firm-specific unlike unsystematic risks. That said, empirical evidences regarding the validity and the usefulness of CAPM are more compelling than those that dwell on its limitations.Historical Account of CAPMThe CAPM was first developed by Jack Treynor, who was a student at Haverford College in the early 1950s (Sullivan, 2006: Perold, 2004). The genesis of the evolution of the CAPM and the calculation of returns and risks using quite sophisticated methods began in the early 1950s when Harry Markowitz found the theory of investor preference. His empirical proposition in the theory was that the investors had the choice to make the decision of combining stocks-what is now referred to us the portfolio. Harry believed that investors could establish a portfolio so as to trade-off the risks and the returns. At this time, the portfolio risk and returns were computed to influence the investors decision. Furthermore, in retrospect, the determination of the cost of an asset was assumed to largely dependent on the methodology used to value that asset and not the payout policies as seconded by Miller and Modigiliani (DeAngelo and DeAngelo, 2006, 293). When the technology advanced and the researchers wer e now able to collect and process data efficiently, William Sharpe, Jack Treynor, John Lintner and Jan Mossin developed further the CAPM in 1960.Modern finance featured the determination of the cost of capital based on the amount of finance that a company has. This approach has received various criticism on the argument that the valuation of asset cannot only be based on the amount that was used to finance the asset. The approach that Modiglian and Miller used concerning the valuation of business or calculation of the weighted cost of capital has been considered subjective since it hugely depends on the forecast of returns (Perold, 2004, 5). With the nature of the economic situation and markets that faces different countries, then forecasting the cash flows and using it to calculate the expected returns was not attractive to investors.The CAPM was developed to facilitate the understanding of the relationship between risk and returns. While economists Miller and Modigliani believed t hat the dividend policy was irrelevant when making investment decisions, Lintner believed that the financial policy of a company was very imperative in the determination of returns. The CAPM was backed up by the likes of William Sharpe, Lintner and Mossin who have been credited for their contributions in the finance. Nonetheless, Jack came to be recognized in the recent generation since his failure to publish his work during those time made other contributors more famous.The Critique of CAPMThe most interesting part of the CAPM is that it takes into account the systematic risks. It requires one to understand the distinct features of the two categories of risks and know which one is usually considered by business during the computation of the rate of returns. The systematic and unsystematic risks both play a significant role and in fact, they make the model to be more reliable than other models such as the dividend discount model. It is worth to discern that the systematic represents the overall market dynamics that have influence on the rate of returns. While it remains uncontrollable, the CAPM includes the systematic risk as the market risk and is in turn used to arrive at the market premium. Therefore, the investor is contended that the market premium both systematic and unsystematic risks are accounted for in the model. However, an empirical investigation by Galagedera, 2007, 14) revealed that the inclusion of systematic risks did not influence the returns hugely as it was for the case of normality of returns. In fact, the author proposes that the CAPM can hold if beta only is priced and returns are normalized.The CAPM is flexible since it can be applied during the variability of financial and business risks. The other models such as the Weighted Average Cost of Capital approach may be very difficult to adjust when the cash flow of a business is more volatile from period to period. Notably, the WACC is usually computed based on the average of the cost of e quity and debt. The investment decision by the management relies upon an objective discounting factor, which it can suitably be determined by the CAPM (Uhman and Nepovoln, p.1). The reason is that the model incorporates the risks unlike the WACC.Some researchers have criticized the CAPM model by pointing out a few of its limitations. According to Dempsey (2013, 7) applying the CAPM model is a way of encountering the market based on our own terms rather than the markets. The model seeks to reflect the market as a rational one which in reality it contradicts empirical evidences (Dempsey, 2013, 23). Since the market cannot be rational or perfect, the risk-free return will always change especially if the assets price is more volatile. The CAPM model provides foru decision criteria as artciultated by Magni (2010, 7). The equilibrium net present value and the disequilibrium net future value are the two criteria among the four that Magni say they are not reliable for decision and valuation purposes (p.7). Nonetheless, the CAPM is believed to have paved way for more sophisticated models that are a result of the refinement process. It has proved to even hold in emerging markets such as the Central and South-East European markets. Therefore, even though the model works based on certain assumptions, it has become the basis for valuation of businesses and investment decisions.Overall, the determination of the discounting factor for business can take various approaches. The WACC has been widely used but the modern financiers are using the CAPM. The concept of including the systemic risk factor in the model has been quite contributively in the development of investment and valuation issues.Future Developments and Possible EvolvementOne of the future possible developments is the inclusion of scientific models in the determination of discounting factors. Dempsey (2013, 23) points out that the CAPM has a limitation of making its users to understand the market on their own term s. He articulates that the incorporation of risk-free return is imputed and that it does not change (Brown and Walter, 2013, 44). In reality, he adds, if the market is left without the CAPM the returns will react to the nature of the information in the market either negatively or passively. For instance, if the market information contains good news then the returns will respond positively and vice vasa. Therefore, the development that future research will incorporate is the addition of scientific models so as to obtain more realistic results. Such a model will seek not to make the managers and invest...

The Matriarchs of the House in A Raisin in the Sun by...

In A Raisin in the Sun by Loraine Hansberry, the three strong-willed women of the story have varying opinions, views, and beliefs on life. The story is set in the Southside of Chicago, Illinois. The Younger’s are an African-American family that has struggled to survive financially for many years. With a large injection of money from Mr. Younger’s death, the family struggles to make a unanimous decision on what they will use the 10,000 dollars for. The three major female characters differ in a variety of ways. The author portrays the generation gap and logic of the women by showing Beneatha’s, Ruth’s, and Lena’s (â€Å"Mama†) similarities and differences, strengths and weaknesses, and reveals the woman with the utmost inner strength. The women are similar in the way that they are all African Americans living together in a tiny apartment. All of the ladies are struggling financially and would love to be in a larger space. Beneatha, Ruth, and Le na are all working jointly to have a better life and spark a change in the world. They strive to be seen as equal to a white man or woman. However, each woman is also different from each other. Beneatha, Lena’s daughter, is a young woman who is smart and independent. Beneatha is trying to get her doctorate degree. Getting this degree would be a major uprising for an African American family in this time period. Emily Hales describes, â€Å"As a woman [Beneatha] is expected to raise a family and refuse an education, yet she breaks the norms by

Women Suffrage Essay Outline - 1137 Words

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Many of the organizations had committed members who devoted all of their free time to the organization. Susan Brownell Anthony was one of those committed members. Anthony was born on February 15, 1820 in Adams, Massachusetts. She became interested in Women suffrage at a young age. She practically devoted her life to the Women’s Suffrage Movement. Anthony’s father worked as a farmer. Eventually he became wealthy by starting a cotton mill. Despite their, wealth they lived a simple life. Keeping up with their Quaker faith. Quakers believed in equality between the sexes. Anthony was raised in an environment filled with outspoken women resulting in her outspoken personality. In 1849, Anthony quit her job and rejoined her paren ts, who moved to Rochester Newyork, where Anthony became intrigued with the fight for women s suffrage. Anthony s participation in several organizations and outspoken nature made her a target for criticism. 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Profession Studies and Interpersonal Practice

Question: Discuss about the Profession Studies and Interpersonal Practice. Answer: Introduction As a nurse who is looking into the future of her career, I have many options to look into as I apply for a graduate degree program that would advance my skills and expertise in that field. There are two degree programs which in my opinion are very valuable and competitive while at the same time fulfilling to those with passion for caring and patience with the sick and incapacitated. As I narrow down to what graduate program I would choose, I want a program that is self-satisfactory and in line with my vision and expertise too. A graduated program that is accommodating and will provide me with a larger base to operate and expand my research in nursing as a medical field. That's is what the Hit the Ground Running program is to me. It entails dedication to work, helping me reach the required approvals in the medical system that I need for my future career. The program is flexible and detailed in giving the standard requirements for success in the medical field. I am a passionate and self-dedicated person who has a big heart. The fact that I cannot stand sewing so much suffering in hospital coercion has driven me to dedicating myself to being part of their hope. Offering them a shoulder to lean on and know that they can put their trust in medicine and doctors to provide a solution to their problems. One such approach is through the use of a computer matching program (Postgraduate Medical Council of Victoria, 2017). This makes it easier to match an individual with a hospital. This leads to improved efficiency. Even though a solution may not always be there but giving the patients hope that there is more to hospitals that deaths and morgues but an advancing technology that will zero in on the most complicated cases is soothing. I want to be part of the solution in providing the neat healthcare facilities and services to this great nation. For proper nursing management especially in conditions that require immediate care, a nurse should follow the nursing process; a systematic method of assessment, diagnosis, planning, implementation and evaluation. This is important to direct a nurse in planning patient and enable him/her organize and deliver nursing care. Moreover, the steps are dependent on the accuracy of each of the preceding steps. As a nurse, a quick assessment of the signs of chest pain and shortness of breath point to respiratory distress in the patient. My hypothesis is a case of pulmonary embolism considering the presenting complains (Andrews Massive, 2010) and the fact that the patient had experienced trauma which is a risk factor in pulmonary embolism (Emde Rush, 2001). Pulmonary embolism is a medical emergency that will require proper management for a good outcome (Shaughnessy, 2007). The first priority nursing diagnosis in this case is ineffective tissue perfusion related to obstructed pulmonary circulation. The goal of management is to attain acceptable gas conversation and respirational function by maintaining a respirational rate of 12-20 breaths per minute, oxygen saturation of 95% and a P.H between 7.35-7.45. I will place the patient in semi-Fowlers position. This involves elevating the head of the bed to between 450- 600 to allow for improved breathing since this locus allows amplified thoracic capacity, full pedigree of diaphragm and full lung growth (Smeltzer Bare, 2008). Moreover, this position is comfortable for breathing thus alleviating pain. I will administer humidified oxygen 12 liters per minute via a non-rebreather face mask. Deteriorating respiratory rate and pattern in a patient is a major indicator for oxygen therapy (Smeltzer Bare, 2008). The mask is ideal because it offers high oxygen concentration since the patient does not get to inhale exhaled air and humidified oxygen is preferred so as not to dry mucosal membranes. Supplemental oxygen will help raise and maintain oxygen saturation levels. This in the long run will help improve tissue perfusion. While administering oxygen, I will observe for dyspnea, monitor oxygen saturation levels using pulse oximeter to ensure they are above the ideal 90%. I will also monitor other vital signs such as respirations assessing rate and depth, pulse, temperature and blood pressure. Monitoring these vital signs is important in evaluating any improvement in the patients condition as they assess if interventions undertaken are effective (B?lohlvek, Dytrych, Linhart, 2013). Additionally, I will auscultate for lung sounds and heart sounds. It is also important to perform pain assessment to assess if repositioning has helped alleviate pain. While monitoring the patient, I will delegate another nurse to call a physician who will assess the patient further. I will ensure patent intravenous access and administer normal saline slowly to correct hypotension in patient. Fluid overload is likely to compromise further right-ventricle function(Belohlavek Linhart, 2013). It will be important in administration of thrombolytic medications that will need to be administered as per physician orders. The patient in such a situation is often anxious because they do not understand the nature of what is happening or are scared of unclear outcomes. I will reassure the patient and family members if present. It is important to alleviate anxiety especially in the patient since anxiety tends to increased dyspnea, respiratory rate and work of breathing. Reducing anxiety may also help alleviate pain since the patient relaxes subsequently increasing tolerance and threshold for pain. Prioritization is an important skill that is needed by any professional nurse. Usually comes hand in hand with time management as well as saving of lives and patients in pain. As per my judgement, prioritization will depend on the acuteness of the patient's conditions and also my response reflex. With patients conditions, I would first go for the one with acute asthma. This is mainly because anything that affects the breathing should be dealt with much seriousness. Falling short of breath could be a possible cause of collapsing of vital organs in the body that may lead to death. Fast short breaths and sitting upright means lack of oxygen in the system and therefore attending to the patient would stabilize the oxygen flow thereafter pulling the patient out of the danger zone. I would then visit Mrs. Walter whose blood glucose level was not checked during the routine check. Increase or decrease in blood glucose level could be a dangerous sign. I know that insulin administration should be around 15 minutes prior to eating or we wait for around 15-30 minutes after eating. In this case the patient needs the administration beforewals and therefore I will administer the drug according to the usual prescription. I would indicate on my chart that I have provided the patient with the insulin so that whoever is providing the breakfast meal should be careful. For patient 3, Mr. Young, he is a nil by mouth patient who requires an IV therapy. The situation leading to him being on IV means that he is either onto or out of surgery or he is a patient with a chronic disease that needs the administration. If its the first case, I would review the administration and make sure the fluid content in his body is stable and if need be for more I would administer the IV therapy. Patients going into surgery need a lot of fluid to compensate for the loss during the surgery and after. If its the latter, then I would review administer the right amount as prescribed on his medical chart. I would then attend to Mr. Nguyen and administer the right amount of endone to reduce the amount of pain he is in. This is after I review my fellow nurse's report on him and see the intensity of pain he is in which I really doubt is so chronic as the nurse would have already attended to him Lastly I would consider patient 1 whose condition is a call of nature. Nor to say that her condition is not serious but because she needs quite the attention and that requires enough time. As a nurse, I know that the left hemiplegia has left her quite incapacitated and therefore I will need to support her all through the process. Being a high risk fall patient makes her prone to falls that may cause further damage to her body tissues and can attain a physical injury that may affect her condition and recovery too. Most of my selection and priority is strongly based on the essence of survival first, then time management also came up. I attended to the patients bearing in mind the need to act first and on a definitive time limit as well as ensuring the stability of all of the patients I had to attend to. Sutures are devices used in medicine to hold parts or sections of the skin or flesh that are apart due to a surgery or an accident. They are of different forms in materials ranging from threads to small stainless steel metal pieces. These are used in accordance with the flesh being stitched together and where the parts are located for example the internal body parts, external skin, the eyes, the mouth etcetera (Glynda and Jodie, n.d.). Their application involves the use of needles with the attached thread and are held in place at their end by use of knots. Sutures are generally classified as being absorbable or non-absorbable; depending on whether the body can degenerate and absorb the suture material or not. The absorbable sutures are usually made of polymers whereas the non-absorbable sutures are usually made of special silk. The non-absorbable sutures are the commonly used sutures in stitching skin wounds since they can be retrieved easily due to their proximity the surface. The length of period the seams remain in place hinge on upon the percentage of healing and the countryside of the looped (David, n.d). The process of removing sutures requires great care to protect the healing wound from reinfection. To approach the scenario of the removal of sutures, I as a nurse, has to apprehend the highest degree of hygiene; hand hygiene, sterile surgical instruments among others are the measures I must practice to ensure the lowest risk of infection of the wound. Before I assist my colleague handle the patient, I must first wash my hands thoroughly. This practice is recommended since it is the most important part of practice for health care workers and is the single most effective way to stop the spread of infections; catastrophe to properly accomplish hand sanitation is the leading reason of HAIs and the binge of multi-drug-resistant organisms (MDROs) (Glynda and Jodie, n.d.). An additional measure that I have to ensure before I handle the patient are wearing a pair of non-sterile gloves. At the stage that the suture is being removed, the wound has reached its third healing phase-the tissue remodeling phase. Its at this stage that the wound is gaining tensile strength and its ends are closing in (The Royal Childrens Hospital Melbourne, n.d.). Moisture at this stage should be cleaned by patting dry the wound section that is wet. This is because wetness of the wound could be as a result of some wound discharge which could lead to infection. I would pat dry the wound and take a closer examination of the same to ensure that the wound is not infected. I would also speak with the patient to know whether he is feeling excessive pain on the wound. I would also recommend a highly absorbent dressing for the wound. Melonin is a widely used wound dresser which can be used for after operation and fatality, in precise of light so as to abstemiously radiating wounds, counting Fresh and sewn lesions (Medisave, 2016). Its known for being highly absorbent, allowing the drainage of exudate, plummeting shock to healing tissue, remarkable strike through; therefore, requires fewer dressing changes (Medisave, 2016). Despite Melonins remarkable quality, its advisable to note that Melolin Dressings should be recycled with carefulness in the conduct of leg ulcers that produce abundant quantities of very viscous exudates that can become trapped under the dressing; the incidence of alteration depends entirely upon the countryside and disorder of the wound (Safety First Aid, 2017). I therefore would advise the patient to ensure fluids dont come into contact with the dressing. To the nurse, my colleague, I would advise her to ensure that she checks the patient frequently and change the dressing at short time inte rvals to ensure the bet condition or the promotion of the healing of the wound. Conclusion Proper clinical hygienic practices dictate that no contaminated material should be allowed to come into contact with the ailing part-a broken part of the skin. These practices ensure that the risk of contamination of the wound, at any stage of its healing process, is minimized to boost its healing rate. The part of melonin that came to contact with the bed definitely got contaminated and if it were to come in contact with the wound, it would most probably infect the wound thus leading to the deteriorating of the condition of the wound. I would therefore instruct the nurse against the use of the same on the healing wound. Flesh uncontaminated dressing should be used instead. References Andrews, P. L., Massive, P. E. (2010). Detecting, managing, and preventing pulmonary embolism.American Nurse Today, 21-25. B?lohlvek, J., Dytrych, V., Linhart, A. (2013). Pulmonary embolism, part II: Management.Experimental Clinical Cardiology,18(2), 139. Emde, K., Rush, C. (2001). Suspecting pulmonary embolism. American Journal of Nursing, 19-24. Shaughnessy, K. (2007). Massive pulmonary embolism. Critical Care Nurse, 39-53. Smeltzer, S. C., Bare, B. (2008). Brunner and Suddarth's textbook of Medical Surgical Nursing. Williams Wilkins. The Royal Childrens Hospital Melbourne (n.d.). A great children's hospital, leading the way; Suture line care. Victoria, P. M. (2017). PMCV. Retrieved from PMCV: https://www.pmcv.com.au/