Capital Asset Pricing Model Online

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

 

 

 

 

 

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