CAPM Calculator

The CAPM model (Capital Asset Pricing Model) is one of the foundational models in finance designed to specify the appropriate required rate of return of a financial asset or investment.

  formula as

Risk premium = beta * (market risk premium)

Market risk premium=Rm-Rf

If you want to calculate the CAPM for your asset or investment, you need to use the following CAPM formula,

R = Rf + risk premium

Risk premium = beta* (Rm-Rf)

let us considers,

Rstands for the expected rate of return of an asset or investment

Rfis the risk-free interest rate, typically taken as the yield on a long-term government bond in the country where the project is based,

Rmis the broad market return, and

Betais the parameter of the market risk.

Example For

R = Rf  + beta* (Rm – Rf)

Rf = 3.4% for the 3-month US Treasury Bill.

beta = 0.46,

 CAPM formula,

R = Rf  + beta* (Rm – Rf)

R=3.4+0.46*(10-34)

The answer is CAPM =3.86