CAPM Calculator
Expected Return
Calculate expected return using CAPM
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Solve for Beta
Calculate beta from expected return
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Formula
E(Ri) = Rf + Bi * (E(Rm) - Rf)
Frequently Asked Questions
What is CAPM?
The Capital Asset Pricing Model (CAPM) describes the relationship between systematic risk and expected return for an asset. It states that an investment's expected return equals the risk-free rate plus a risk premium based on its beta.
What is beta in CAPM?
Beta measures the sensitivity of an asset's returns to market returns. A beta of 1 means the asset moves with the market, above 1 means it's more volatile, and below 1 means it's less volatile than the market.
What is market risk premium?
The market risk premium is the difference between the expected market return and the risk-free rate. It represents the additional return investors demand for bearing market risk instead of holding risk-free assets.