Capital asset pricing model

Formula

Capital asset pricing model formula
ERi
The expected return on the capital asset
Rf
The risk-free rate of interest such as interest arising from government bonds
betai
The sensitivity of the expected excess asset returns to the expected excess market returns
ERm
The expected return of the market

Formula description

In finance, the capital asset pricing model (CAPM) is used to determine a theoretically appropriate required rate of return of an asset, if that asset is to be added to an already well-diversified portfolio, given that asset's non-diversifiable risk.

Calculator (how to use calculator?)

Capital asset pricing model formula
Rf
betai
ERm
ERi
Precision

Formula code

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References

  1. wikipedia:Capital asset pricing model.

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