Investing your company's earnings wisely requires walking a fine line between the gains you hope to achieve and risks you are willing to take to get them. The CAPM, or Capital Asset Pricing Model, ...

Kristina Zucchi is an investment analyst and financial writer with 15+ years of experience managing portfolios and conducting equity research. Vikki Velasquez is a researcher and writer who has ...

Portions of this article were drafted using an in-house natural language generation platform. The article was reviewed, fact-checked and edited by our editorial staff. The capital asset pricing model ...

The capital asset pricing model (CAPM) is a financial model used to determine a security’s expected return considering its associated risk. Developed in the 1960s, CAPM has become an essential tool in ...

Pete Rathburn is a copy editor and fact-checker with expertise in economics and personal finance and over twenty years of experience in the classroom. The capital asset pricing model (CAPM) and the ...

CAPM calculates expected stock returns using the risk-free rate, stock beta, and market return. The riskier the stock, the higher the return investors should demand. CAPM aids in investment analysis ...

Rachael has a Bachelor’s degree in mass media from Wilson College, Mumbai and a Master’s degree in English from Pune University. The Capital Asset Pricing Model (CAPM) is a foundational concept in ...

One of the key insights of the CAPM is that it answers an important investment question: "What is the expected return if I purchase security XYZ?" The assumption that Sharpe built into the model is ...

Cost of equity calculates an asset's required return, aligning it with investment risk. It is determined using dividend capitalization or CAPM, providing a threshold for viable projects. This metric ...