m5 a1 495211

M5: Assignment 1: Problem Analysis Due Thursday, September 26, 2013. In this module, you have been introduced to the capital asset pricing model (CAPM). The required return can be determined by the application of the CAPM: Expected return = Risk-free rate + Beta (Expected market return – risk-free rate) In your discussion below, fully discuss each component and its relation to the expected return calculation. In other words, how does each component impact the expected return for an investment. Next, using an investing site such as Yahoo!Finance, locate the beta for 3 companies within the same industry and calculate the expected return. For example, Pfizer, GlaxoKlineSmith ,and Johnson & Johnson are companies within the drug manufacturers industry. Discuss the meaning of the calculation including which company you would invest and why. (NOTE: For the expected return calculation use 0.08% as the risk-free rate and 8.5% for the expected market return). Submit your essay in Microsoft Word, double-spaced, in Times New Roman 12 pt. font. Cite all sources and be sure to use the current APA standards when formatting your paper. All written assignments and responses should follow APA rules for attributing sources. Grading Criteria Maximum Points Demonstrated an understanding of the topics being discussed. 4 Met the criteria for the correct responses to the assigned questions. 4 Participation Criteria Used vocabulary relevant to the topics under discussion. 4 Participated in the discussion by asking a question, providing a statement of clarification, providing a point of view with rationale, challenging a point of discussion, or making a relationship between one or more points of the discussion. 4 Justified ideas and responses by using appropriate examples and references from texts, websites, and other references or personal experience. 4 Wrote in a clear, concise, and organized manner; demonstrated ethical scholarship in accurate representation and…