CAPM Calculator - Capital Asset Pricing Model

Calculate the expected return on an investment using the Capital Asset Pricing Model (CAPM). Determine the relationship between systematic risk and expected return for assets, particularly stocks.

CAPM Inputs

Risk-Free Rate (Rf)

Typically 10-year Treasury yield

Market Return (Rm)

Expected return of the market (e.g., S&P 500)

Beta (β) Measure of systematic risk relative to market

Additional Options

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CAPM Analysis Results

CAPM Inputs
Risk-Free Rate (Rf)	0%
Market Return (Rm)	0%
Beta (β)	0
Market Risk Premium	0%

CAPM Results

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CAPM Insights

CAPM Formula: Expected Return = Risk-Free Rate + Beta × (Market Return - Risk-Free Rate)
Beta (β): Measures systematic risk. β = 1 means same risk as market; β > 1 means more volatile; β < 1 means less volatile.
Market Risk Premium: Market Return - Risk-Free Rate.
Risk Premium of the Asset: Beta × Market Risk Premium. This is the additional return investors expect for holding the asset's specific risk.
Cost of Equity: CAPM is commonly used to calculate the cost of equity for WACC calculations.
Interpretation: Higher beta means higher expected return to compensate for higher risk.

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