please include the questions and answers in the solution doc
M4 – Pricing Models
Introduction: In this module, you learned about pricing models used in valuations. (CAPM, APT, Fama French, Carhart)
Initial Post: Based upon the textbook readings or using your professional experience:
Answer the following questions:
What are the strengths of CAPM?
What are the weaknesses of CAPM?
Using the company that you chose for your project, argue in favor of using one pricing model other than CAPM
to calculate the discount rate. Why did you choose this model?
Explicitly list the risk factors you would include. (For example: GDP
changes, energy prices, etc.)
M6 – After the Subprime Crisis
Introduction: Following the subprime crisis,
credit default swaps and mortgage backed securities became highly
controversial instruments and their use declined precipitously. In
recent years, that trend has reversed with the demand for these products
increasing.
Initial Post: Based upon the textbook readings or using your professional experience:
Answer the following questions:
Is suspicion toward credit default swaps and mortgage backed securities warranted?
Are these evil instruments that should be banned permanently?
Is there any constructive role for these securities?
Find a current event article (please keep the article under 800
words) involving credit default swaps or mortgage backed securities.
Post your article to the discussion.
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