Capital Asset Pricing Model (CAPM)

The Capital Asset Pricing Model (CAPM) calculator computes a rate of return that combines both risk and time value of money.

INSTRUCTIONS: Enter the following:

• (r_f)  This is the risk-free rate of return
• (β_j) This is the beta of the security
• (r_m) This is the expected market rate of return

CAPM:  The calculator returns the CAPM as a percentage.

The Math / Science

Investments typically need to reflect a rate of return for the period of investment and accommodation for the level of risk.  In finance, the capital asset pricing model (CAPM) is an empirical model used to determine a theoretically appropriate required rate of return of an asset, if that asset is to be added to an already well-diversified portfolio, given that asset's non-diversifiable risk.

Source: Wikipedia https://en.wikipedia.org/wiki/Capital_asset_pricing_model