RATIONALE OF THE STUDY:
The Study on the capital asset pricing model in equity shares of banking companies will be undertaken with the objective of getting an insight into the concept of investments, market risk, security market line, undervalued and overvalued stocks, the risks, and the returns. The study aims to determine the market risk involved in the investments and the factors affecting the market risk and to determine the required rate of returns. The other objectives of the study are to observe the security market line and the degree of volatility of the Banking industry and undervalued and overvalued stocks.
OBJECTIVES OF THE STUDY:
- To observe the risk-free rate and evaluate the relationship between risk and return involved in equity share prices of the banking industry.
- To observe the significant risk of shares (market risk or systematic risk).
- To observe the relationship between the security market line and the capital market line
- To develop the inputs required for applying the capital asset pricing model.
- To produce a benchmark for evaluating various investments and finding out whether the stocks are under or overvalued.
Method of data collection:
The Historical data of share prices for the period of one year will be collected from the BSE index for the study.
Source of data
Secondary data will be collected from respective websites like Bseindia.com, Moneycontrol.com, and other financial Journals.
Period of the study
The study will be done for a period of 30-40 days.
Data analysis tools:
Appropriate data tools like Beta, Mean, and Standard deviation will be used.
LIMITATIONS OF THE STUDY
- The study will be based on secondary data only.
- The study will be limited to banking stocks only
- The time for the project is limited to 30-40 days
SCOPE FOR FURTHER RESEARCH:
The study covers information related to the equities share of the banking sector. It also covers the systematic risk and unsystematic risks of banking companies. The study is confined to only one Sector i.e., the banking industry, and the entire study is based on their Stock prices for a period of the last two years. The present study gives an insight into this issue by analyzing the capital asset pricing model Analysis in Equity share prices of the Banking industry.