Finance 101: CAPM, Active v/s Passive Fund Management
CAPM
During my Introduction to Corporate Finance course, I got interested in CAPM dervied by Dr. William Sharpe. I wanted to know the crux of it in detail and I found an excellent article mentioned below. This article describes the fundamental of CAPM...
Capital Asset Pricing Model
Active Fund Management v/s Passive Fund Management
During my course work @ Haas I was explained by my professor that in "long term an actively managed fund cannot beat a passively managed indexed fund". He explained me the rational behind it in details and I kind a nod my head stating that I understood it very well. However, I was puzzled by this statement and wanted to know the arithmetic behind it. Here again Dr. William Sharpe came to my rescue. I found a nice paper by Dr. Sharpe that gives mathematical rational behind those statments utterred by my professor.
The article can be downloaded by clicking the following link
The Arithmetic of Active Management
posted by bania@haas at 1:55 PM
2 Comments:
The maximum upward moment on short term interest rate is 25 basis points, if at all there is any upward moment. However, history has shown us that this rosed interest rates cannot sustain for long time.
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