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Calculation of CAPM (Capital Asset Pricing Model)
The cost of equity (Ke) is the rate of return expected by shareholders. One can calculate it using the formula
Cost of equity = Risk-free rate + Beta X Risk premium
Cost of equity (Ke) = the rate of return expected by shareholders
Risk-free rate (rrf ) = the rate of return for a risk-free security
Risk premium ( Rp) = the return that equity investors demand over a risk-free rate
Beta (Ba) = A measure of the variability of a company’s stock price in relation to the stock market overall
Now let’s understand these key terminologies of the formula:Risk-Free Rate Recommended Courses Beta
Risk can be classified as systematic risk and unsystematic risk. Unsystematic risk is a diversifiable risk. This risk arises due to the internal factors prevailing in an organization. For example, workers have gone on a strike, customers’ commitments are not fulfilled, the regulatory framework conflicts with government policy, etc.
Systematic risk is a risk that is not diversifiable. It occurs due to external factors that affect an organization and is uncontrollable in nature. For example, interest rate rises suddenly or fluctuations in the trading price of a security impact the entire market. One can measure this risk with a beta.
Beta measures the volatility of a security in comparison with the market as a whole.
If a security’s beta is equal to 1, if the market moves upward by 10%, the stock having beta equal to 1 will also increase by 10% and vice versa.
If a security’s beta is less than 1, it means that the security is less volatile in comparison to the market. For example, a company has a beta of 0.5; this means that if the market has an upward movement of 10%, the company will have an upward movement of 5% and vice versa.
If the beta of company security is more than 1, the security has high volatility. For example, if the company security has a beta of 1.5 and the stock market moves up by 10%, then the security moves up by 15 % and vice versa.Risk Premium Assumptions for the CAPM (Capital Asset Pricing Model) Model
Investors don’t like to take a risk. They would want to invest in a portfolio that has low risk. So if a portfolio has a higher risk, the investors expect a higher return.
While making the investment decision, investors consider only a single period horizon, not multiple period horizons.
Transaction cost in the financial market is assumed to be low cost, and the investors can buy and sell the assets in any number at a risk-free rate of return.
In CAPM (Capital Asset Pricing Model), values must be assigned for the risk-free rate of return, risk premium, and beta.
Risk-free rate – The yield on the government bond is used as a risk-free rate of return, but it changes on a daily basis according to the economic circumstances.
Beta – The value of beta changes over time. It is not constant. So the expected return might also differ.
Market Return – The stock market return can be calculated as the sum of the average capital gain and the average dividend yield. If the Shares prices fall and outweigh the dividend yield, a stock market can provide a negative rather than a positive return.Advantages of CAPM (Capital Asset Pricing Model)
CAPM (Capital Asset Pricing Model) considers systematic risk, as the unsystematic risk can be diversified.
It creates a theoretical relationship between risk and the rate of return from a portfolio.CAPM Application
Using the CAPM (Capital Asset Pricing Model)model, please compute the expected return of a stock where the risk-free Rate of return is 5%, the beta of the stock is 0.50, the expected market return is 15%
Cost of equity = Risk-free rate + Beta X Risk premium
Cost of equity = 10%Recommended Articles
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In psychology, selective attention is a cognitive procedure in which one or more than one stimulus is attended to while all the other sensory inputs are ignored or suppressed. However, selective attention is crucial to individuals’ functioning in everyday life by selectively attending to particular stimuli and not others, ignoring overloading and information processing system. For the process of selective attention, researchers have found many theories, and Treisman’s attenuation model is one among them.What is Treisman’s Attenuation Model?
In 1964, Anne Treisman proposed the attenuation theory of attention, where the processing of unattended pieces of information is attenuated. An attenuator is an electrical device that lowers the magnitude or power of a signal without significantly bending its waveform. Treisman suggested that it gets attenuated or weakened instead of blocking out unattended messages. According to Treisman, some meaningful or unattended information may still be available, but it may be difficult to remember or recover. Triesman conducted various experiments to prove the validity of the Attenuation theory by using the speech shadowing method. The experiment participants were provided two different auditory messages in each ear through headphones. With the help of this procedure, Triesman tried to understand the amount and the kind of information the participant could remember from the unattended messages. The attenuation Model of Treisman is seen as a revision to Broadbent’s filter model.Process of Attenuation Occurring
The attenuation model of Treisman keeps both the idea of an early selection process and the apparatus by which physical cues are used as the primary point of inequity. Nevertheless, contrasting with Broadbent’s filter model, the filter now attenuates the unattended information instead of filtering it out totally. Treisman describes this model by adding the concept of a threshold to elucidate how some words came to be heard in the unattended channel with higher frequency than others. After the attenuation commences, information is passed on to a hierarchy of analyzers that perform greater level processing to get more meaningful content. The main part of attenuation theory is that attended inputs will go through full processing every time. In contrast, irrelevant stimuli often lack a sufficiently lower threshold to be fully briefed, impacting only physical qualities recalled rather than semantics.Recognition Threshold & Effectors of Threshold
The functioning of the recognition threshold is straightforward. A person has a definite threshold or amount of activation needed to recognize every feasible input. The lower the threshold level, the more simply and likely an input will be recognized, even after attenuation. There are several effectors of the threshold. Those are −
Context and Priming − Context plays a vital role in lowering the threshold needed to understand stimuli by making an expectancy for connected information. An apparatus of priming perform context. Accordingly, the information related to it becomes more relevant and accessible temporarily- reducing the threshold for understanding the procedure.
Subjective Importance − Words with subjective importance will have a lower degree of a threshold than those that do not have any subjective importance. On the other hand, few words are more changeable in meaning and depend upon their density of use, continuity, and context with the attended message to be recognized.
Degree of Attenuation − The attenuation degree can differ in connection to the content of the fundamental message. With the greater amount of attenuation happening for logical messages that possess little benefit to the individual hearing them. Confused messages get the largest amount of attenuation as any intervention they may show up on the attended message would be more harmful than that of complementary information. The attenuation level has an intense result on whether an input will be recognized and can actively differ based on the attentional demands.Hierarchy of Analyzers
While facilitating the possibility for vital, unexpected, or attended stimuli to be recognized, it ensures that those messages are adequately attenuated and do not get through much more than the prior stages of analysis, stopping an overburden on sensory processing capacity. Full hierarchy processing takes place if the attentional demand is low. If the demands are high, attenuation becomes more aggressive and only allows vital or pertinent information from the unattended message to be processed. The hierarchical analysis procedure features a serial nature, surrendering a distinctive impact for each word analyzed. Attenuated messages pass through all the analyzers only if the threshold has been powered in the favor. The hierarchical process also provides an essential motive if inputs are similar in voice, size, and spatial cues. All these physical features must be similar between messages, and then attenuation cannot effectively happen at an early level based on these things. Rather, attenuation will happen during the recognition of words and meanings, and this is where the magnitude of grasping information can be short.Conclusion
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The LG G8 has a great screen and processor, but its gimmicks are just too much to bear.
That’s a shame, because underneath all of the gimmicks is really good phone. Maybe even a great one.
Had LG focused on the things that matter while undercutting its Samsung and Google rivals, it might have had a hit on its hands. Instead, the LG G8 is filled with gimmicks that might be fun initially, but their persnicketiness and general uselessness ultimately frustrate and cheapen the experience.
It’s not enough for LG that the G8 ThinQ has the best processor, a great screen, an impressive battery, and a solid camera. Like nearly every G phone that came before, the G8 also has to be different, and that’s where it gets tripped up.
Mind you, the G8 is still saddled with LG’s overly staid design language and UI deficiencies. But with top-of-the-line specs and gesture navigation, LG’s latest flagship should be able to stand up to the Galaxy S10 or Pixel 3 XL. And it probably would, if not for all of those gimmicks.The design remains the same
If you’ve ever seen the LG G7, you already know what the G8 looks like. It has the same 6.1-inch display, ports, and overall shape, and comes in the same two colors: black and silver. The dedicated Google Assistant button remains. While the G8 is a touch heavier at 167 grams (versus 162 for the G7), the two phones have an extremely similar aesthetic and frame, right down to their unbalanced bezels:
G8: 151.9 x 71.8 x 8.4mm
G7: 153.2 x 71.9 x 7.9mm
Things are a little different on the back. LG has mounted the camera array horizontally rather than vertically, bringing it more in line with the V40 than with previous ‘G’ phones. It’s also fully encased under the glass, which gives it a sleeker, smoother look compared to other all-glass phones. If not for the fingerprint sensor in the middle, in fact, the back of the G8 would be just as smooth as the front. It’s a good look, and makes the camera bumps on iPhone XS all the more unsightly.
The LG G8, left, has a OLED display versus the LCD on last year’s G7.A top-notch screen, processor, and battery
The G8’s display is the same size and resolution as the G7’s, notch and all, but there’s one big change: LG has switched from LCD to OLED. LG’s OLED screens have been somewhat problematic in the past, with dull colors and banding, but there’s no such issues here. It’s definitely a nice upgrade over last year’s LCD, even with a notch that LG insists on calling a “new second screen.”
In a nutshell, the LG G8 is a good phone undone by some bad gimmicks.
Two other high points on the G8 are its speed and battery life. Like the Galaxy S10, the G8 uses the newest Snapdragon 855 chip. Consequently it’s an absolute workhorse, launching, switching, and handling apps with ease. Benchmarks backed up my real-world impressions, and while it’s not a massive boost over the G7’s Snapdragon 845 (8,980 vs 7,832 based on PC Mark’s Word 2.0 score), it’s definitely more than enough speed for any user.
The G8 runs on Android 9, but you won’t find Digital Wellbeing or any kind of screen-time monitoring. Gesture navigation is represents, however, and you get a similar implementation of the swipe-up-on-the-home-button method that you’ll find on the Google Pixel. LG still hasn’t quite mastered the app drawer, but the implementation is good and you can toggle back to the old way if you’d prefer.
Unfortunately, the rest of UX 8.0 leaves much to be desired. LG’s Android skin is both boring and unintuitive, with bloated settings, unwanted apps, and an overall clunky aesthetic. Much like Samsung did with the excellent One UI, it could use a complete makeover.Time-of-flight is dumb on arrival
The rest of the G8’s featured tech is where the problems creep in. Filling the space left by the receiver in the notch is the G8’s unique signature feature, a time-of-flight “Z Camera” front sensor that’s used for three things: 3D facial unlock, vein and palm unlock, and touch-free gestures.
You can dismiss calls using Air Motion on the G8, but it’s easier to just tap the Ignore button.
Hand ID, LG’s name for its bizarre palm unlocking feature, doesn’t work nearly as well. Not only did it fail to recognize my hand more than half the time, but I struggled to find a legitimate case scenario in which it would be useful. Even if it worked, raising your palm to your phone while holding it with the other hand is cumbersome at best. Presumably LG is thinking of those times when your G8 is lying flat on a table. But it’s just as quick to use a pattern or a PIN.
Hand ID lets you unlock your phone by holding your palm in front of the time-of-flight camera. In theory, anyway.
While Apple has baked Face ID into all aspects of iOS, LG reserves face unlock and Hand ID for unlocking. That’s partly because Android doesn’t support time-of-flight scanners for system-wide authentication, and partly because LG has focused its time-of-flight innovations on what might be the most useless feature to ever appear on a smartphone: Air Motion.
Sadly, it’s also the G8’s most marketable feature, allowing you to control parts of the phone without needing to touch the screen. Instead of taps and swipes, you hold your hand about a six inches from the front camera until your hand is recognized. Then you can wave to do things like play music and answer calls, and twist to raise and lower the volume. It’s something people are going to want to try out and it might even convince a few people to buy one.
With a swipe of your hand you can launch one of two apps on the G8 and control some tasks.A camera with little new to offer
There’s nothing wrong with the G8’s camera, there’s just not much new about it either. Like the G7, the G8 has a dual camera, and the specs are very similar:
G7: 16MP, f/1.6, 1 μm + 16MP, f/1.9, 1 μm
G8: 12MP, f/1.5, 1.4 μm + 16MP, f/1.9, 1 μm
As such, the two phones take very similar pics. In an age of triple and quadruple cameras, the G8’s array feels a little pedestrian. Its ultra-wide lens is no longer a novelty, and what was once a leading camera app is more or less run-of-the-mill now. Thankfully, the ThinQ bits have been toned down, too: For instance, the AI Cam, which used to visually process every aspect of the scene with words that flew across the screen, is little more than normal computational adjustments on the fly now.
The G8 (left) captured better color and detail than the G7 (center) in this Lego figure, but again, the Google Pixel 3 (right) is a clearly winner.
The G8’s camera offers a few improvements. Auto focus works better and faster, and the new Night View mode isn’t nearly as artificial looking as the Super Bright Camera mode was on the G7. However, when comparing the G*’s images to those of a top-notch camera such as the Pixel 3, or even last year’s Samsung Galaxy S9, the differences are stark.
The LG G8’s night mode (left) is a bit darker than the G7 (center), but much. of the detail is still preserved. However, the Pixel 3 (right) took the low-light crown, with better brightening and detail than either phone.Should you buy an LG G8?
There are plenty of reasons to buy the G8: top-of-the-line processor, excellent battery life, great screen, solid camera. But great specs and nice hardware aren’t enough when you’re competing with the Galaxies and Pixels of the world. The unique features that should make the G8 worthy of its $829 price tag are unfortunately where it falls short.
To get Air Motion to work, you need to hold your hand in just the right spot.
The G8 would be easier to recommend if it were $200 cheaper. As it stands, you can get a Galaxy S10e or an iPhone XR for $70 less than a G8, and both of those deliver a better UI and equal or better performance without the cheap tricks. The G8’s time-of-flight tricks only serve to cheapen the experience, rather than strengthen it with strong facial recognition and portrait shots.
So if you can get it for a healthy discount, I suppose the G8 is worth considering. But even then, I’d probably recommend the Galaxy S10e instead. For my money, the G8 is just one too many gimmicks over the line.
The link between a particular cluster of symptoms and an underlying impairment in physiologic function is emphasized in biological models of psychopathology. In the biological model, genetic factors, brain abnormalities, neurotransmitter dysfunctions, and other biological factors are considered the cause of psychiatric abnormalities.What does Biological Model of Abnormal Psychology Refer?
The biological model of abnormal psychology presents a detailed understanding of biological processes as a basis of abnormal behavior. In the biological model, the thoughts and feelings of an individual are explained through the biochemical and bioelectrical processes within the body and the brain.Importance of Biological Variables
Biological variables or factors play a very important role in determining abnormal behavior, which can be viewed from two angles. On the one hand, they can be seen as the main etiological reasons, much like when a disorder’s etiology has a significant hereditary component. On the other hand, they can also be seen as an organismic variable (i.e., individual differences) that interacts with the environment to influence the symptom of choice.Biological Theorists Explanation of the Model
Brain Anatomy and Abnormal Behavior
Brain Chemistry and Abnormal Behavior
Let us understand the biological model through brain anatomy and brain chemistry.Brain Anatomy and Abnormal Behavior
Brain Anatomy plays an important role in diagnosing abnormal behavior. The brain comprises billions of support cells called “glia” and about 100 billion nerve cells called neurons. The brain is divided into various regions by vast clusters of neurons. For instance, the cerebrum, which comprises the cortex, corpus callosum, basal ganglia, hippocampus, and amygdala, is a collection of areas towards the top of the brain. The neurons in each of these areas of the brain regulate crucial processes. The cortex is the brain’s outer layer; the corpus callosum connects the two cerebral hemispheres; the basal ganglia is essential for planning and moving; the hippocampus aids in emotion and memory regulation, and the amygdala is necessary for emotional memory.
Clinical experts have found links between several psychological diseases and abnormalities in particular brain parts. One such condition is Huntington’s disease, characterized by violent emotional outbursts, memory loss, suicidal thoughts, and uncontrollable bodily motions. It is related to the loss of cells in the basal ganglia and cortex.Brain Chemistry and Abnormal Behavior
Biological experts have shown that issues with message transmission from one neuron to another can be connected to psychiatric diseases, which lead to abnormal behavior. It can be understood that electrical impulses that move from one neuron to one or more others carry information throughout the entire brain. A neuron’s dendrites, antenna-like projections found at one end of the cell, are the first to pick up an impulse. It then proceeds along the axon, a protruding fiber from the neuron’s body. Finally, it is sent to the dendrites of other neurons via the nerve ending at the end of the axon.
The neurons do not touch each other. One neuron is separated from the next by a very small gap known as a synapse, and the message must traverse this gap somehow. A neuron’s terminal is activated by an electrical impulse to release a substance known as a neurotransmitter, which travels across the synaptic space to receptors on the dendrites of the surrounding neurons. Some neurotransmitters send a signal to receiving neurons to “fire” or to start their electrical impulse after attaching to the receptors on the receiving neuron. Other neurotransmitters provide sensory neurons an inhibitory message, instructing them to cease all firing.
As you can see, neurotransmitters are essential for the brain’s ability to transfer information. Studies indicate that abnormal activity by certain neurotransmitters can lead to specific mental disorders and abnormalities in behavior. For example, Depression has been linked to low activity of the neurotransmitters serotonin and norepinephrine.Biological Causes of Abnormality
It includes –
Genetics − Abnormal behavior can also be caused due to genetic inheritance. According to studies, schizophrenia, mood disorders, and other mental disorders may also be influenced by inherited traits. It indicates that several genes frequently work together to form healthy and unhealthy human behaviors.
Viral Infections − According to studies, schizophrenia is an illness that is caused due to exposure to specific viruses as a child or before birth. This may contribute to developing delusions, hallucinations, and other deviant behaviors. It was seen that others of many people with this disorder contracted influenza or certain viruses throughout their pregnancy.
Evolution − Theorists contend that many genes responsible for abnormal functioning resulted from common evolutionary principles. Evolutionary theorists contend that human responses and the genes underlying them have endured over time because they have aided people in thriving and adapting.Treatments under Biological Model
Once the physical sources of abnormal behavior are identified, a biological course of treatment is chosen. Treatments may includ.
Drug Therapy − Psychotropic drugs are used for treatment and are widely used in modern times. One of the examples of such drugs is anti-depressants which are used for people diagnosed with Depression.
Electro definitive therapy − In this therapy, two electrodes are joined to a patient’s forehead, and an electrical flow of 65 to 140 volts is passed momentarily through the mind. The ongoing process causes a cerebrum seizure that lasts a couple of moments. After seven to nine ECT meetings, separated a few days separated, numerous patients feel significantly less discouragedp
Psychosurgery − In psychosurgery, there is a technique known as a lobotomy where a specialist cuts the associations between the frontal lobe and the brain’s lower regions. The present psychosurgery systems are significantly more accurate than the lobotomies of the past.Conclusion
The biological model has proven valuable in adding more information to abnormal psychology. Much research has been done and is continuing to be done in this aspect. However, it also holds some drawbacks in that all abnormal behavior cannot be attributed to the biological factors of the individual. Therefore, the model has pros and cons and is of great importance.
What is a BCG Model?
The Boston Consulting Group (BCG) put forward a model of corporate posters of companies at different stages of their business position. It is the BCG model that charts market shares against market growth.
The BCG model, also known as the Growth-Share Matrix, is a market model which assumes that a product’s market share shows its cash generating power.
Both Market share and Market growth have high and low phases. Therefore, there are four options in terms of cash of the corporate structure in the BCG model. They are as follows −Block 1 – Stars
The first block represents both high market shares and high growth opportunities. This block is known as ‘Stars’. Stars are self-sustaining in nature and since there is super profit and super growth, the businesses in this cell of the two cell-matrix BCG model do not need extra investment to grow.Block 2 – Cash Cows
Cash Cows is the next block that has a high market share but low growth. The money obtained from Cash Cows should be transferred to some other projects as the growth opportunities in such a position is bleak.Block 3 – Dogs
Dogs is the block that has both low market share and low market growth. It is the weakest cell in the BCG model and it cannot sustain competition in the market. The funds in Dogs block cannot be retrieved and the company that has a dog’s project is destined to go through a loss. Corporate firms usually want to liquidate or disinvest the ‘dogs’ products to extract the investment.Block 4 – Wild Cats
Wild Cats is a cell that had a low market share but high market growth. The Wild Cats can go to the stars’ level if they can imbibe rapid growth by diversifying their portfolio or by other marketing policies.BCG Model Analysis
In strategic finance, there is a policy to transfer the extra finance from Cash Cows to Wild Cats (also called question marks and problem children). It is easy to see why such a policy is popular. In the cash cow position, a company has extra cash from a high market share but its market growth is at a low rate. The transfer from Cash Cow to Wild Cats is necessary to keep the momentum of growth and profitability intact.Cash Generation at Stars Level
Stars in the BCG model generate enough cash from the market and the companies would want to elongate the tenure in which they are at the ‘stars’ position. However, in most the cases, they end up falling into the cash cows segment due to the extra cash generated by the firm.Changing of positions
Although most companies would like to stay in the ‘stars’ segment, it is often seen that companies keep changing their position with due course of time. A company cannot stay in the ‘stars’ block forever. It has to go to Cash Cow or Dogs block in the future.Divest Money from Dog’s Segment
It is also a fact that no company prefers to be in the ‘Dogs’ block and so they divest money from the dog’s segment in order to regain as many funds as is possible.Wild Cats’ Block Represents High Market Growth
The wild cats’ block represents high market growth and low market share. In this block, the growth of the company is very high and companies in the ‘Wild Cats’ segment tend to go to the ‘Stars’ segment as soon as possible.Conclusion
Knowing the position in the BCG matrix helps companies realize what they should do with their firm. If there is a chance of more profitability, the firms should try to access it by making the required arrangements.
Moreover, if the company finds that there is no scope for growth or market share of a product, it must abandon the product and divest the operations.
Therefore, the BCG model is one of the most useful tools for making corporate decisions that may impact the whole organization.
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