2025年CFA认证考试真题解析

2025年CFA认证考试真题解析考试时间：______分钟总分：______分姓名：______试卷内容1.Aninvestorisconsideringaddingastocktotheirportfolio.Thestockhasanexpectedreturnof12%andastandarddeviationof20%.Theportfoliocurrentlyconsistsof70%stockswithastandarddeviationof15%and30%bondswithastandarddeviationof5%.Thecorrelationcoefficientbetweenthestockandtheexistingportfoliostocksis0.6,andthecorrelationcoefficientbetweenthestockandthebondsis0.1.Whatistheexpectedreturnandstandarddeviationoftheportfolioafteraddingthisstock,assumingtheweightsremain70%instocksand30%inbonds?2.Acompanyisevaluatingaprojectwithaninitialinvestmentof$1,000,000.Theprojectisexpectedtogeneratecashflowsof$300,000attheendofeachyearfor5years.Thecompany'scostofcapitalis8%.UsingtheNetPresentValue(NPV)method,shouldtheprojectbeaccepted?3.AnanalystisvaluingastockusingtheDividendDiscountModel(DDM).Thecompanyjustpaidadividendof$2pershare.Theanalystexpectsdividendstogrowataconstantrateof5%peryearindefinitely.Therequiredrateofreturnonthestockis10%.WhatistheestimatedintrinsicvalueofthestockaccordingtotheDDM?4.Abondwithafacevalueof$1,000paysanannualcouponof6%.Thebondhasamaturityof10years.Ifthemarketrequiredyieldtomaturity(YTM)is5%,whatistheapproximatepriceofthebond?5.WhatistheprimarypurposeoftheEfficientMarketHypothesis(EMH)?6.Describethemaindifferencebetweenacalloptionandaputoption.7.Aninvestorholdsaportfolioconsistingof100sharesofStockA(price$50)and200sharesofStockB(price$30).Theinvestorusesamarginaccountandborrows$3,000fromthebrokertopurchaseadditionalsharesofStockA.Whatistheinitialmarginrequirementifthemaintenancemarginrequirementis30%?8.Whatisthedifferencebetweentheaccountingincomeandtheeconomicincomeofacompany?9.Acompanyreportsnetincomeof$500,000.Ithasdepreciationexpenseof$50,000andanincreaseinaccountspayableof$20,000duringtheyear.Whatistheapproximatecashflowfromoperatingactivitiesusingtheindirectmethod?10.Whatarethetwomaintypesofriskinvolvedininvestinginbonds?11.Aninvestorisconsideringinvestinginamutualfundthatchargesafront-endloadof2%andhasannualexpenseratiosof1.5%.Thefund'sportfolioisexpectedtogenerateatotalreturnof8%beforefees.Whatistheapproximatetotalreturntheinvestorcanexpectafterallfees?12.Discusstheconceptofbeta.Howisitusedinportfoliomanagement?13.WhatistheprimarydifferencebetweenIFRS(InternationalFinancialReportingStandards)andUSGAAP(GenerallyAcceptedAccountingPrinciples)?14.Explaintheconceptofimmunizationinthecontextoffixedincomeportfoliomanagement.15.AnanalystisperformingaDuPontanalysisonacompany.Thecompanyhasareturnonassets(ROA)of10%,totalassetturnoverof2,andaprofitmarginof5%.Whatisthecompany'sequitymultiplier?16.Whatarethethreemainformsofbusinessorganization?17.Acompanyisconsideringissuingnewdebttofinanceaproject.Whatarethepotentialadvantagesanddisadvantagesofusingdebtfinancing?18.Explaintheconceptofoperatingleverage.Howdoesitaffectacompany'sprofitability?19.Whatisthepurposeofasensitivityanalysisincorporatefinance?20.Describethedifferenttypesofderivativecontracts(futures,options,forwards,swaps).21.Aninvestorisconsideringinvestinginrealestate.Whataresomeofthepotentialbenefitsandrisksofinvestinginrealestatecomparedtoinvestinginstocksorbonds?22.Whatisthedifferencebetweenanactiveinvestmentstrategyandapassiveinvestmentstrategy?23.Explaintheconceptofassetallocation.Whyisitimportantinportfoliomanagement?24.Whatistheroleofaportfoliomanager?25.DescribetheethicalresponsibilitiesofaCFAcharterholder.26.Youareaportfoliomanagerresponsibleforaclient'sinvestmentportfolio.Theclientexpressesconcernaboutthepotentialimpactofinflationontheirportfolio.Describethestepsyouwouldtaketoassessandmitigatetheinflationrisk.27.Acompanyisacquiredbyanothercompany.Whatarethemainissuesthatneedtobeconsideredduringtheduediligenceprocess?28.Describetheconceptofmarketefficiency.Whatarethedifferentformsofmarketefficiency?29.Ananalystisevaluatingtwostocks.StockAhasanexpectedreturnof12%andastandarddeviationof18%.StockBhasanexpectedreturnof10%andastandarddeviationof15%.Whichstockisriskier?Explainyouranswer.30.Whatisthedifferencebetweenaprimarymarketandasecondarymarket?31.Describetheroleofcreditratingagenciesinthefixedincomemarket.32.Explaintheconceptofduration.Howisitusedbyinvestors?33.Aninvestorholdsaportfolioconsistingof60%stocksand40%bonds.Theexpectedreturnandstandarddeviationofthestocksare12%and20%,respectively.Theexpectedreturnandstandarddeviationofthebondsare5%and5%,respectively.Thecorrelationcoefficientbetweenthestocksandbondsis0.1.Whatistheexpectedreturnandstandarddeviationoftheportfolio?34.Whatisthepurposeofthecapitalassetpricingmodel(CAPM)?35.Discussthefactorsthatcaninfluenceacompany'sweightedaveragecostofcapital(WACC).36.Explaintheconceptoffinancialleverage.Howdoesitaffectacompany'searningspershare(EPS)?37.Whatisthedifferencebetweenhorizontalanalysisandverticalanalysisoffinancialstatements?38.Describethekeycomponentsofacomprehensiveincomestatement.39.Whatisthepurposeofacashflowstatement?40.Explaintheconceptofgoodwill.Howisitreportedonthebalancesheet?试卷答案1.ExpectedReturn=(0.7*12%)+(0.3*5%)=8.4%+1.5%=9.9%StandardDeviation=sqrt[(0.7^2*20^2)+(0.3^2*5^2)+(2*0.7*0.3*20*5*0.6)]=sqrt[0.2469+0.0225+0.126]=sqrt(0.3954)≈0.629or62.9%(Alternatively,usingportfoliovarianceformula:0.7^2*0.2^2+0.3^2*0.05^2+2*0.7*0.3*0.2*0.05*0.6=0.02468+0.00225+0.01206=0.03899.sqrt(0.03899)≈0.19747or19.75%.Note:Thecorrelationwithbondsistypicallyassumedzerounlessspecified,andthecorrelationbetweenthenewstockandtheexistingportfolio(0.6)likelyreferstothestockportion(0.7*0.6).Thecalculationabovefollowsthisinterpretation.Asimplerinterpretationmightassumethe0.6correlationappliesdirectlytotheportfolioweightcalculation,leadingtoastandarddeviationclosertotheweightedaverageoftheindividualcomponentsifuncorrelated,oradifferentcalculationifcorrelated.Giventhephrasing,thefirstcalculationusingthefullformulaismorestandardforportfoliocontext.Let'sadjusttheinitialthoughtprocessbasedonstandardportfoliovarianceformulaapplication).*RevisedCalculation:*Usingthestandardportfoliovarianceformulawithcorrelation0.6betweennewstockandthe*stockpart*oftheportfolio:Cov(Portfolio,Stock_new)=Corr(Portfolio,Stock_new)*SD(PortfolioStock)*SD(Stock_new)=0.6*0.2*0.2=0.024PortfolioVariance=(0.7^2*0.2^2)+(0.3^2*0.05^2)+(2*0.7*0.3*0.024)=0.02468+0.00225+0.01008=0.03601PortfolioSD=sqrt(0.03601)≈0.1898or18.98%NewPortfolioReturn=9.9%(ascalculated)NewPortfolioSD=18.98%2.NPV=-1,000,000+[300,000/(1+0.08)^1]+[300,000/(1+0.08)^2]+[300,000/(1+0.08)^3]+[300,000/(1+0.08)^4]+[300,000/(1+0.08)^5]NPV=-1,000,000+277,777.78+257,201.38+237,955.95+220,508.50+204,201.43NPV=-1,000,000+1,197,744.04NPV=197,744.04SinceNPV>0,theprojectshouldbeaccepted.3.IntrinsicValue=D0*(1+g)/(r-g)=2*(1+0.05)/(0.10-0.05)=2.1/0.05=424.Price=[C*(1-1/(1+YTM)^n)/YTM]+[F/(1+YTM)^n]Price=[60*(1-1/(1+0.05)^10)/0.05]+[1000/(1+0.05)^10]Price=[60*(1-1/1.6289)/0.05]+[1000/1.6289]Price=[60*(1-0.6139)/0.05]+[613.91]Price=[60*0.3861/0.05]+613.91Price=[23.166/0.05]+613.91Price=463.32+613.91=1077.23(ApproximationusingPVfactors:PVofcoupons=60*PVIFA(5%,10)≈60*7.7217=463.30;PVoffacevalue=1000*PVIF(5%,10)≈1000*0.6139=613.90.Total≈1077.20.Let'susetheexactcalculationresult.)5.TheprimarypurposeoftheEfficientMarketHypothesis(EMH)istoexplaintherelationshipbetweenstockpricesandtheinformationavailableinthemarket.Itsuggeststhatcurrentstockpricesreflectallavailableinformation,makingitimpossibletoconsistentlyachievereturnsabovethemarketaveragewithouttakingonadditionalrisk.6.Themaindifferencebetweenacalloptionandaputoptionisthedirectionofthepotentialprofit.Acalloptiongivestheholdertheright(butnotobligation)tobuyanunderlyingassetataspecifiedstrikepricebeforeaspecifiedexpirationdate.Theholderprofitsiftheunderlyingasset'spricerisesabovethestrikeprice.Aputoptiongivestheholdertheright(butnotobligation)tosellanunderlyingassetataspecifiedstrikepricebeforeaspecifiedexpirationdate.Theholderprofitsiftheunderlyingasset'spricefallsbelowthestrikeprice.7.InitialMargin=(ValueofStockHoldings-LoanAmount)/ValueofStockHoldingsValueofStockHoldings=(100*$50)+(200*$30)=$5,000+$6,000=$11,000InitialMargin=($11,000-$3,000)/$11,000=$8,000/$11,000≈0.7273or72.73%(Themaintenancemarginrequirementis30%,meaningtheequitymustremainabove30%ofthetotalvalue.Initialmarginiscalculatedbeforethetrade.Theequityis$8,000.Totalvalueis$11,000.Equity/Value=$8,000/$11,000=72.73%.Thisiswellabovethe30%maintenancemargin.)8.AccountingincomeiscalculatedbasedonGenerallyAcceptedAccountingPrinciples(GAAP)andreflectsrevenuesrecognizedandexpensesmatchedwithinaspecificaccountingperiod,sometimesinvolvingestimatesandjudgments.Economicincome,ontheotherhand,isthechangeintheindividual'sorcompany'seconomicwealthduringaperiod,calculatedasthedifferencebetweentheactualcashreceivedandthecashoutflowsincurredtogeneratethosecashreceipts.Economicincomeisclosertothechangeinnetworth.9.CashFlowfromOperatingActivities(IndirectMethod)=NetIncome+Non-CashExpenses-IncreaseinWorkingCapital(or+DecreaseinWorkingCapital)CFOA=$500,000+$50,000-$20,000=$530,00010.Thetwomaintypesofriskinvolvedininvestinginbondsarecreditrisk(theriskthatthebondissuerwilldefaultonitspaymentsofinterestand/orprincipal)andinterestraterisk(theriskthatchangesinmarketinterestrateswillnegativelyaffectthebond'sprice,especiallyforbondswithlongermaturitiesorlowercoupons).11.TotalReturnafterFees=FundReturn*(1-Front-EndLoad)*(1-AnnualExpenseRatio)TotalReturn=8%*(1-0.02)*(1-0.015)TotalReturn=0.08*0.98*0.985=0.078272or7.83%12.Betameasuresthevolatilityofanindividualassetoraportfolioinrelationtotheoverallmarket(typicallyrepresentedbyamarketindex).Itquantifiesthesystematicrisk.Abetaof1meanstheasset'spricemoveswiththemarket.Abetagreaterthan1indicateshighervolatilitythanthemarket,whileabetalessthan1indicateslowervolatility.BetaisusedinportfoliomanagementtoassesstheriskcontributionofanassettotheportfolioandtoestimatetheexpectedreturnoftheportfoliobasedontheCapitalAssetPricingModel(CAPM).13.TheprimarydifferencebetweenIFRS(InternationalFinancialReportingStandards)andUSGAAP(GenerallyAcceptedAccountingPrinciples)liesintheirunderlyingconvergenceversusdivergence.IFRSisprinciple-based,allowingmorejudgmentandflexibility,andisusedinmostcountriesworldwide.USGAAPismorerule-based,detailed,andoftenmoreprescriptive,primarilyusedintheUnitedStates.Differencesexistinareaslikerevenuerecognition,leaseaccounting,inventoryvaluation,andthetreatmentoffinancialinstruments.14.Immunizationinfixedincomeportfoliomanagementisastrategyaimedatprotectingtheportfolio'svalueordurationfromadversechangesinmarketinterestrates.Theprimarygoalisoftentomatchthedurationoftheportfolio'sassetswiththedurationofitsliabilities(e.g.,pensionobligations)orsimplytominimizeinterestrateriskexposurewhilemaintainingadesiredlevelofyield.15.EquityMultiplier=TotalAssets/TotalEquityROA=NetIncome/TotalAssetsROA=(NetIncome/TotalEquity)*(TotalEquity/TotalAssets)ROA=EquityMultiplier*ReturnonEquity(ROE)ROE=ROA/EquityMultiplierEquityMultiplier=ROA/ROEGivenROA=10%andROE=5%,EquityMultiplier=10%/5%=216.ThethreemainformsofbusinessorganizationaretheSoleProprietorship(abusinessownedandoperatedbyoneindividual),thePartnership(abusinessownedbytwoormoreindividualswhoshareprofits,losses,andresponsibilities),andtheCorporation(alegalentityseparatefromitsowners,characterizedbylimitedliability,potentialtaxadvantages,andtheabilitytoissuestock).17.Advantagesofdebtfinancinginclude:(1)TaxShield:Interestpaymentsondebtaretax-deductible,loweringthefirm'staxburden.(2)FinancialLeverage:Canamplifyreturnstoequityholdersifthereturnonassetsexceedsthecostofdebt.(3)PreservationofOwnership:Doesnotdiluteownershiporcontrol(unlikeequityfinancing).(4)PredictablePayments:Fixedinterestandprincipalpayments.Disadvantagesinclude:(1)FixedObligations:Requiresregularinterestandprincipalpayments,increasingfinancialriskifcashflowisinsufficient.(2)RiskofBankruptcy:Failuretomeetdebtobligationscanleadtobankruptcy.(3)Covenants:Debtagreementsoftencomewithrestrictivecovenantslimitingmanagement'sactions.(4)IncreasedCostofCapital:Asdebtincreases,therisktolendersalsoincreases,potentiallyraisingthecostoffuturedebt.18.Operatingleveragereferstotheuseoffixedcostsinacompany'scoststructure.Acompanywithhighoperatingleveragehasahigherproportionoffixedcostscomparedtovariablecosts.Thiscanleadtogreaterpercentagechangesinoperatingincome(EBIT)resultingfrompercentagechangesinsalesvolume.Whilehighoperatingleveragecanamplifyprofitswhensalesincrease,italsoincreasestheriskoflosseswhensalesdecline.19.Sensitivityanalysisisatechniqueusedincorporatefinancetodeterminehowsensitiveaparticularoutput(e.g.,NetPresentValue,InternalRateofReturn,projectprofitability)istochangesinkeyassumptionsorinputs(e.g.,salesvolume,costofcapital,priceperunit).Ithelpsmanagersunderstandtherisksassociatedwithdifferentscenariosandmakemoreinformeddecisionsbyidentifyingthemostcriticalfactors.20.Derivativecontractsderivetheirvaluefromanunderlyingasset(e.g.,stock,bond,commodity,currency,index).Themaintypesare:(1)FuturesContracts:Obligationstobuyorsellanassetatapredeterminedpriceonaspecifiedfuturedate;markedtomarketdaily.(2)OptionsContracts:Givetheholdertheright(butnotobligation)tobuy(calloption)orsell(putoption)anassetatapredeterminedprice(strikeprice)beforeoronaspecifiedfuturedate;theseller(writer)hastheobligation.(3)ForwardsContracts:Similartofuturesbutaretypicallycustomized,privateagreementsbetweentwoparties,nottradedonanexchange,andmarkedtomarketlessfrequently.(4)Swaps:Agreementsbetweentwopartiestoexchangecashflowsoveraperiod,ofteninvolvingtheexchangeofinterestpaymentsbasedonanotionalprincipalamount(e.g.,interestrateswaps,currencyswaps).21.Benefitsofinvestinginrealestatecomparedtostocksorbondsinclude:potentialforcapitalappreciation,rentalincome(cashflow),taxadvantages(deductionsformortgageinterest,propertytaxes,depreciation),inflationhedgingpotential,andtangibleassetownership.Risksincludeilliquidity(hardertosellquickly),hightransactioncosts(buying/selling),managementresponsibilities,propertyappreciationvolatility,potentialforvacancy,andproperty-specificrisks(damage,obsolescence).22.Anactiveinvestmentstrategyinvolvesattemptingtooutperformamarketindexthroughsecurityselection(choosingstocks/bondsbelievedtobeundervalued)and/ormarkettiming(buying/sellingassetsbasedonpredictedmarketmovements).Anpassiveinvestmentstrategyinvolvesaimingtoreplicatetheperformanceofaspecificmarketindexbyholdingaportfolioofthesecuritiesincludedinthatindex,minimizingtradingcostsandexpenses.Thegoalofpassiveinvestingistoachievemarketreturns,whileactiveinvestingseekssuperiorreturns.23.Assetallocationistheprocessofdividinganinvestmentportfolioamongdifferentassetcategories(e.g.,stocks,bonds,realestate,cash)basedonaninvestor'sgoals,risktolerance,investmenthorizon,andtimehorizon.Itisthemostimportantdecisionininvestmentplanningbecauseitfundamentallydeterminestheportfolio'soverallriskandreturnprofile.Thegoalistobalanceriskandreturnbydiversifyingacrossassetswithlowornegativecorrelations.24.Theroleofaportfoliomanageristoresearch,select,andmanageaportfolioofinvestmentsonbehalfofclients(individualorinstitutional).Thisinvolvesassetallocation,securityselection,monitoringportfolioperformance,rebalancingtheportfoliotomaintainthedesiredassetmix,managingrisk,generatingreturns,andcommunicatingwithclients.Theyusetheirexpertiseandmarketknowledgetomakeinvestmentdecisionsaimedatachievingclientobjectives.25.EthicalresponsibilitiesofaCFAcharterholderinclude:(1)Integrity:Actinghonestlyandfairly,avoidingconflictsofinterestanddisclosingthemifunavoidable.(2)Competence:Maintainingandimprovingprofessionalknowledgeandskills,performingdutiesdiligently.(3)Professionalism:Conductingoneselfhonorably,fairly,andethically;maintainingconfidentiality;respectingothers.AdherencetotheCFAInstituteCodeofEthicsandStandardsofProfessionalConductismandatory.26.Asaportfoliomanagerconcernedaboutinflationrisk,Iwould:(1)AssessCurrentandExpectedInflation:Analyzeinflationdata,forecasts,andpotentialdrivers.(2)EvaluatePortfolioExposure:Identifyassetssensitivetoinflation(e.g.,realassetslikerealestate,commodities,TIPS;assetswithinflation-linkedrevenues).(3)DiversifyAcrossAssetClasses:Includeassetshistoricallylesscorrelatedwithtraditionalstocksandbondsduringinflationaryperiods.(4)ConsiderInflation-ProtectedSecurities:InvestinTreasuryInflation-ProtectedSecurities(TIPS)orsimilarinstruments.(5)AdjustAssetAllocation:Potentiallyincreaseallocationtorealassetsorinflationhedges,anddecreaseallocationtofixed-incomeassetswithfixednominalpayments.(6)MonitorandRebalance:Continuouslytrackinflationandportfolioperformance,rebalancingasneededtomaintainthedesiredallocationandinflationmitigationstrategy.27.Mainissuesintheduediligenceprocessduringanacquisitioninclude:(1)FinancialDueDiligence:Reviewingfinancialstatements,cashflows,debtstructure,taxhistory,andprojectionsforaccuracyandpotentialliabilities.(2)LegalDueDiligence:Examiningcontracts,litigationhistory,intellectualproperty,realestate,employmentagreements,regulatorycompliance,andenvironmentalissues.(3)OperationalDueDiligence:Assessingbusinessprocesses,ITsystems,supplychain,customerbase,andorganizationalstructure.(4)CommercialDueDiligence:Evaluatingmarketposition,competition,product/serviceofferings,andgrowthprospects.(5)CulturalDueDiligence:Assessingthecompatibilityofcorporateculturesbetweenthetwoorganizations.28.Marketefficiencyreferstothedegreetowhichmarketpricesreflectallavailableinformation.Inanefficientmarket,pricesadjustrapidlyandaccuratelytonewinformation,makingitdifficulttoconsistentlyachievereturnsabovethemarketaveragethroughactivetradingbasedonpubliclyavailableinformation.Theformsofmarketefficiencyaregenerallycategorizedas:weakformefficiency(pricesreflectallpasttradingdata),semi-strongformefficiency(pricesreflectallpubliclyavailableinformation),andstrongformefficiency(pricesreflectallinformation,bothpublicandprivate).29.StockAhasahigherexpectedreturn(12%vs10%)andahigherstandarddeviation(18%vs15%).Standarddeviationmeasurestotalrisk,includingbothsystematic(market)andunsystematic(specifictothestock)risk.Therefore,StockAisriskierintermsoftotalvolatility.However,betameasuresonlysystematicriskanditsrelationshiptothemarket.Withoutknowingthemarketreturnorthecorrelationofeachstockwiththemarket,wecannotdefinitivelystatewhichstockhashighersystematicrisk(beta).Thequestionasksforriskbasedonstandarddeviation,whichmeasuresoverallrisk.30.Aprimarymarket(alsocalledthenewissuemarket)iswheresecuritiesarecreatedandsoldtoinvestorsforthefirsttime.Companiesissuestocksorbondsintheprimarymarkettoraisecapital.Asecondarymarket(alsocalledtheaftermarket)iswherepreviouslyissuedsecuritiesaretradedamonginvestors.ExamplesincludestockexchangesliketheNYSEorNASDAQ.Theprimarymarketbringsnewcapitalintotheeconomy,whilethesecondarymarketprovidesliquiditytoexistingsecurities.31.Creditratingagenciesplayacrucialroleinthefixedincomemarketbyassigningcreditratingstobondissuersandtheirspecificbondissues.Theseratings(e.g.,AAA,AA,A,BBB,etc.,orMoody'ssymbols)provideanassessmentoftheissuer'sabilityandwillingnesstomaketimelypaymentsofinterestandprincipal.Theyhelpinvestorsevaluatethecreditriskofthebond,facilitatecomparisonbetweendifferentbonds,influencethebond'spriceandyield,andareoftenusedforregulatoryorinvestmentpolicyrequirements.32.Durationisameasureofthesensitivityoftheprice(orvalue)ofafixedincomesecuritytochangesininterestrates.Itquantifiestheweightedaveragetimeuntilcashflowsfromthebondarereceived.Therearedifferenttypes(MacDDurations,ModDur,Convexity).Itisusedbyinvestorstoestimatethepercentagechangeinabond'spriceforagivenchangeinyield,allowingforbettermanagementofinterestrateriskwithinaportfolio(e.g.,matchingdurationsofassetsandliabilities).33.PortfolioExpectedReturn=(Weight_Stocks*Return_Stocks)+(Weight_Bonds*Return_Bonds)ExpectedReturn=(0.6*12%)+(0.4*5%)=7.2%+2.0%=9.2%PortfolioVariance=(Weight_Stocks^2*SD_Stocks^2)+(Weight_Bonds^2*SD_Bonds^2)+(2*Weight_Stocks*Weight_Bonds*Corr*SD_Stocks*SD_Bonds)PortfolioVariance=(0.6^2*0.2^2)+(0.4^2*0.05^2)+(2*0.6*0.4*0.1*0.2*0.05)PortfolioVariance=(0.36*0.04)+(0.16*0.0025)+(2*0.6*0.4*0.1*0.01)PortfolioVariance=0.0144+0.0004+0.00048=0.01528PortfolioSD=sqrt(0.01528)≈0.1237or12.37%34.ThepurposeoftheCapitalAssetPricingModel(CAPM)istoprovideamethodfordeterminingtheexpectedreturnonaninvestment,givenitsriskrelativetothemarket.Itestablishesalinearrelationshipbetweentheexpectedreturnofanassetanditsbeta(systematicrisk).Themodelisusedforassetvaluation,costofequitycapitalestimation,andportfoliomanagementdecisions,providingabenchmarkforassessingwhetheraninvestmentisfairlyvalued,overvalued,orundervalued.35.Factorsthatcaninfluenceacompany'sWeightedAverageCostofCapital(WACC)include:(1)Risk-FreeRate:Therateofreturnonrisk-freeinvestments(e.g.,governmentbonds).Changesaffectthediscountratecomponent.(2)MarketRiskPremium:Theadditionalreturninvestorsexpectfortakingontheriskoftheoverallmarketovertherisk-freerate.(3)Company-SpecificBeta:Measuresthecompany'svolatilityrelativetothemarket;higherbetaincreasescostofequity.(4)TaxRate:Corporatetaxrate;affectstheafter-taxcostofdebt(sinceinterestistax-deductible).(5)CostofDebt:Theeffectiveinterestrateacompanypaysonitsdebt;influencedbycreditrating,marketconditions,anddebtstructure.(6)CostofEquity:DeterminedbytheCAPMorothermodels,influencedbyrisk,marketconditions,andcompany-specificfactors.(7)CapitalStructure:Theproportionofdebtandequityfinancing;changesimpacttheweightsintheWACCcalculationandthecostofdebt/equity.36.Financialleveragereferstotheuseofdebttofinanceacompany'soperationsandgrowth.Itinvolvesusingborrowedfundstoincreasepotentialreturnstoequityholders.Theeffectonearningspershare