Exercise | January 2007

Multifactor Models

by Malcolm P. Baker

Abstract

Students evaluate the performance of four mutual funds and compute the cost of capital for two companies using fixed benchmarks, the CAPM, and a multifactor model of returns.

Keywords: Cost of Capital; Performance Evaluation; Business Model; Investment Funds; Investment Return; Motivation and Incentives; Markets;

Citation:

Baker, Malcolm P. "Multifactor Models." Harvard Business School Exercise 207-056, January 2007.