Finance and Investment Business Intractibility and Applications

Question: Describe about the Finance and Investment for Business Intractibility and Applications. Answer: Part 2: Valuation 1. CAPM estimation: Particulars Standard Deviation Singapore DBS Bank 0.055 OCBC Bank 0.047 UOB Bank 0.055 STI Index 0.037 Table 1: Standard deviation of Singapore DBS Bank, OCBC Bank, UOB Bank and STI Index (Source: Yahoo Singapore Finance 2016) Particulars Covariance DBS and STI -0.00167 OCBC and STI -0.00151 UOB and STI -0.00159 Table 2: Covariance of Singapore DBS Bank, OCBC Bank, UOB Bank and STI Index (Source: Yahoo Singapore Finance 2016) Particulars Average Return DBS Bank 0.004975 OCBC Bank -0.000348 UOB Bank 0.001867 STI Index 0.001834 Table 3: Average or expected return of Singapore DBS Bank, OCBC Bank, UOB Bank and STI Index (Source: Yahoo Singapore Finance 2016) Particulars DBS Bank OCBC Bank UOB Bank Beta -1.210949 -1.095129922 -1.150810406 Risk-free rate 2.125% 2.125% 2.125% Expected Market Return 0.001834 0.001834 0.001834 Cost of Equity 4.48% 4.25% 4.36% Table 4: CAPM valuation, cost of equity of Singapore DBS Bank, OCBC Bank, UOB Bank and STI Index (Source: Yahoo Singapore Finance 2016) Reference and Bibliographies: Brown, P. and Walter, T., 2013. The CAPM: theoretical validity, empirical intractability and practical applications.Abacus,49(1), pp.44-50. Da, Z., Guo, R.J. and Jagannathan, R., 2012. CAPM for estimating the cost of equity capital: Interpreting the empirical evidence.Journal of Financial Economics,103(1), pp.204-220. Dempsey, M., 2013. The capital asset pricing model (CAPM): the history of a failed revolutionary idea in finance?.Abacus,49(1), pp.7-23. Johnstone, D.J., 2013. The CAPM debate and the logic and philosophy of finance.Abacus,49(S1), pp.1-6. Yahoo Singapore Finance. (2016).Yahoo Singapore Finance. [online] Available at: https://sg.finance.yahoo.com/ [Accessed 22 Sep. 2016].