Posted: September 13th, 2017

Economics of Corporate Finance

Paper, Order, or Assignment Requirements

Economics of Corporate Finance (ECO-5001B) Essay Topic: The Security Market Line has historically been flatter than the Capital Asset Pricing Model (CAPM) would predict (see Figure 1 below). This means that low beta stocks earn higher abnormal returns (alphas) than high beta stocks. Discuss potential explanations for this finding. Figure 1: Fama, E., F., French, K., R., (2004). The Capital Asset Pricing Model: Theory and Evidence. Journal of Economic Perspectives, 18, 25- 46. Word Limit: 1300 words (excluding references) Submit electronically to the Learning and Teaching HUB no later than 15.00 on Wednesday 18th March 2015