Financial Risk Management. The CAPM Model

Conclusion
There are several issues about CAPM model – it considers past data and the beta should not be utilized completely for the future volatility of return or the expected return predicted by CAPM may not be accurate. Based on these critics researches has already made several competitive models or tried to develop CAPM. Perhaps in the future these CAPM disadvantages will try to prevent. However, to sum up all the critics we can see that the CAPM is not a perfect model, but despite this CAPM is in some way simply and important benchmark in financial management. It is easily understood, easily applied, and it does have empirical support. The CAPM is very helpful in understanding the security market. It is very important, because it serves as a model for pricing the risk in all securities, and thus helps investors evaluate and measure portfolio risk. It is still well used worldwide and its success over the past years shows there are definitely some big advantages.
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