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Capital Asset Pricing Model Calculator
- R = stands for the expected rate of return of an asset
- RF = risk-free interest rate
- Rm = broad market return
- Beta = parameter of the market risk
Defination / Uses
The CAPM model (Capital Asset Pricing Model) is one of the foundational models in finance designed to specify the applicable required rate of return of a pocket asset or investment.
Considering that CAPM is substantially applied to pocket means ( securities), in the following, we will concentrate on these type of means. Since the core of the CAPM model is the "beta" parameter, which is the most extensively employed financial measure used by academic experimenters and interpreters, we shall get a bit more insight in its function.