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fin.capm-expected-return Calculator
Calculates CAPM expected return from risk-free rate, equity risk premium, and beta. CAPM is the theoretical foundation for cost of equity — required return increases linearly with beta, though empirically the relationship is flatter than the model predicts.
Inputs
Risk Free
Return on a theoretically safe investment like a government T-bill. The baseline return everything else is compared against. Enter as a decimal (e.g. 0.05 for 5%).
Beta
Reference formula or conversion factor shown for context.
Market Return
Reference formula or conversion factor shown for context.
Current Price
Current price per share. Used in P/E ratios, options pricing, and market cap calculations.
Fair Value
Reference formula or conversion factor shown for context.
Results
CAPM expected return
Sample size or count used in the calculation.
market premium
The price paid for the option or insurance coverage. Option premium = intrinsic value + time value + volatility premium.
beta
Reference formula or conversion factor shown for context.
implied holding period return
Sample size or count used in the calculation.
attractive?
The value at the specified point or condition.
CAPM: E(r) = rf + β(rm-rf)
Reference formula or conversion factor shown for context.