Invaluable advice for job-hunting college seniors

First Friday Book Synopsis

Bob''s blog entries CAPM model David l. Here is a brief excerpt from an article by David l. Pierce for the Wall Street Journal. You may have a college senior in your family or know one or more elsewhere. If so, I hope you will share it. To read the complete article, check out other resources, and obtain WSJ subscription information, please […].

Complimentary Resource – Change Is Constant: PMBOK Guide 5th Edition

Strategy Driven

Anyone contemplating pursuit of their PMP or CAPM certification within the next 12 months needs to know that both the PMP and CAPM examinations will change from dependence on the PMBOK Guide® Fourth Edition to focus on the PMBOK Guide® Fifth Edition on July 31, 2013. Change Is Constant : PMBOK Guide 5th Edition. by Global Knowledge. The fifth edition of the PMBOK Guide® was released and once again the profession of project management moved forward.


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Still Many Ways to Skin a Capital Cost

Harvard Business Review

knew that firms were making heavy use of the capital asset pricing model (CAPM) to size up growth opportunities, but that the model was only as good as its inputs. But that article was written a decade ago, and still the CAPM rules — and as for how to come up with the crucial inputs to it, well, practice remains all over the map. Not at all, he said, because it's "no secret that applying the CAPM is as much an art as financial science." The same is true for the CAPM. ".

DCF 12

Why Sit on All that Cash? Firms Uncertain on Cost of Capital

Harvard Business Review

In estimating the cost of equity, nearly nine out of ten organizations use the capital asset pricing model (CAPM), which calculates the cost of equity using a risk-free rate, beta factor, and a market risk premium, each of which introduces significant variability. Budgeting Finance Strategic planning CAPMWith a record $2 trillion in cash and short-term liquid assets on hand, U.S. non-financial firms certainly seem poised to expand. What's holding them back?

What Private Equity Investors Think They Do for the Companies They Buy

Harvard Business Review

Furthermore, few PE investors explicitly use the capital asset price model (CAPM) to determine a cost of capital. Instead, PE investors typically target a 22% internal rate of return on their investments on average (with the vast majority of target rates of return between 20 and 25%), a return that appears to be above a CAPM-based rate. The private equity industry has grown markedly in the last 20 years and we know more than we used to about its effects on the economy.

What the Great Fama-Shiller Debate Has Taught Us

Harvard Business Review

Early tests of CAPM came out reasonably well, and by the end of the 1970s Fama’s former student Michael Jensen was (in)famously declaring that “I believe there is no other proposition in economics which has more solid empirical evidence supporting it than the Efficient Market Hypothesis.”. But it’s just as valid to hold on to CAPM and label these effects market inefficiencies.

Why Those Guys Won the Economics Nobels

Harvard Business Review

Back in the ‘60s, people developed the capital asset pricing model [CAPM] as a way to do that. And the theory that was available then was CAPM. So when Fama started, the cross-sectional model was the CAPM, and for the time series people just said well let’s just assume that risks don’t change over time, so whatever risk adjustment there is it’s the same today, tomorrow, and thereafter. But everybody still uses the method that came out of CAPM.