Financial Concepts

Capital Asset Pricing Model (CAPM)

The CAPM establishes a relationship between risk and return. According to it, the expected return on a security is equal to the risk free return plus a product of the surplus return over the risk free rate and the risk (beta) of the investment.

E_r = R_f + (E_m - R_f)*B

Where, E_r = Expected or Required return of the security
R_f = Risk free rate
E_m = Expected return of the security of a similar nature
B = Beta of the security.

Higher the beta, higher should be the required return from such investment.

Time Value of Money

Risk and Return

Valuation of Securities

Financial Statement Analysis

Fund Flow Analysis

Capital Structure