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Strategic
decisions & Working Capital (WC)
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Investment
decisions |
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Modes of diversification
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Inter-Organizational relationships
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Others : |
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Long-Term
Financial decisions |
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Investment
analysis and decision |
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THE SECURITY
MARKET LINE (SML)
Firms |
β |
R f |
R m |
CAPM= SML |
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0,00 |
0,317% |
8,204% |
0,32% |
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0,10 |
0,317% |
8,204% |
1,11% |
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0,20 |
0,317% |
8,204% |
1,89% |
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0,30 |
0,317% |
8,204% |
2,68% |
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0,40 |
0,317% |
8,204% |
3,47% |
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0,50 |
0,317% |
8,204% |
4,26% |
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0,60 |
0,317% |
8,204% |
5,05% |
A |
0,70 |
0,317% |
8,204% |
5,84% |
M |
0,80 |
0,317% |
8,204% |
6,63% |
C |
0,90 |
0,317% |
8,204% |
7,42% |
Market |
1,00 |
0,317% |
8,204% |
8,204% |
D |
1,10 |
0,317% |
8,204% |
8,99% |
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1,20 |
0,317% |
8,204% |
9,78% |
E |
1,30 |
0,317% |
8,204% |
10,57% |
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1,40 |
0,317% |
8,204% |
11,36% |
F |
1,50 |
0,317% |
8,204% |
12,15% |
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1,60 |
0,317% |
8,204% |
12,94% |
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1,70 |
0,317% |
8,204% |
13,72% |
Example of Portofolio
Firms |
Allocation of funds |
Expected Return |
Betas |
Risk Premium |
A |
15,0% |
5,84% |
0,70 |
5,52% |
M |
20,0% |
6,63% |
0,80 |
6,31% |
C |
18,0% |
7,42% |
0,90 |
7,10% |
D |
22,0% |
8,99% |
1,10 |
8,68% |
E |
15,0% |
10,57% |
1,30 |
10,25% |
F |
10,0% |
12,15% |
1,50 |
11,83% |
Portfolio |
100,0% |
8,31% |
1,01 |
8,00% |
| Market |
100,0% |
8,204% |
1,00 |
7,887% |
(c) ECOFINE.COM, Bernard Jaquier, Professor Emeritus & Dr Honoris Causa, Lausanne, Switzerland, 2025
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