This model has been heavily criticised and debated over the past decades, and many of the economists are of the opinion that this framework is not adequate enough to assess various risk factors comprehensively. However, none of the opponents could introduce a potential alternative to this concept till date. This paper will critically analyse the applicability of the CAPM in corporate finance applications in the context of modern business environment. Corporate applications of CAPM Hillier et al (2008, section 5.1) provide a detailed view of the corporate applications of the capital asset pricing model. Through a well integrated theoretical concept and empirical evidences the authors give readers an easy understanding of the applicability of CAPM in corporate finance. Through this section, the authors address the misconception that the CAPM theory is applicable only to investment purposes. The application of capital asset pricing model together with mean variance analysis is greatly supporting corporate managers in decision making process today (Grinblatt & Titman 2003, p. 132). The author argues that a manger is most likely to lose his job if his organisation is continuously struggling with declining stock prices (ibid). ...

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