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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 |
|
0,00 |
0,656% |
8,327% |
0,66% |
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0,10 |
0,656% |
8,327% |
1,42% |
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0,20 |
0,656% |
8,327% |
2,19% |
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0,30 |
0,656% |
8,327% |
2,96% |
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0,40 |
0,656% |
8,327% |
3,72% |
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0,50 |
0,656% |
8,327% |
4,49% |
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0,60 |
0,656% |
8,327% |
5,26% |
A |
0,70 |
0,656% |
8,327% |
6,03% |
M |
0,80 |
0,656% |
8,327% |
6,79% |
C |
0,90 |
0,656% |
8,327% |
7,56% |
Market |
1,00 |
0,656% |
8,327% |
8,327% |
D |
1,10 |
0,656% |
8,327% |
9,09% |
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1,20 |
0,656% |
8,327% |
9,86% |
E |
1,30 |
0,656% |
8,327% |
10,63% |
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1,40 |
0,656% |
8,327% |
11,40% |
F |
1,50 |
0,656% |
8,327% |
12,16% |
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1,60 |
0,656% |
8,327% |
12,93% |
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1,70 |
0,656% |
8,327% |
13,70% |
Example of Portofolio
| Firms |
Allocation of funds |
Expected Return |
Betas |
Risk Premium |
A |
15,0% |
6,03% |
0,70 |
5,37% |
M |
20,0% |
6,79% |
0,80 |
6,14% |
C |
18,0% |
7,56% |
0,90 |
6,90% |
D |
22,0% |
9,09% |
1,10 |
8,44% |
E |
15,0% |
10,63% |
1,30 |
9,97% |
F |
10,0% |
12,16% |
1,50 |
11,51% |
Portfolio |
100,0% |
8,43% |
1,01 |
7,78% |
| Market |
100,0% |
8,327% |
1,00 |
7,671% |
(c) ECOFINE.COM, Bernard Jaquier, Professor Emeritus & Dr Honoris Causa, Lausanne, Switzerland, 2024
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