CAPM Calculator
Estimate a stock's expected return with the capital asset pricing model, the risk-free rate plus beta times the market risk premium.
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Enter the rates and beta to see the expected return.
Worked example
With these example inputs:
- Risk-free rate3%
- Expected market return9%
- Beta0.8
Expected return: 7.8%
- Market risk premium6.0%
Frequently asked questions
What is the capital asset pricing model?
CAPM estimates the return investors should expect from an asset given its risk. It adds a risk premium, scaled by beta, to the risk-free rate.
What does beta mean?
Beta measures how much a stock moves relative to the market. A beta of 1 moves with the market. Above 1 is more volatile, below 1 less so.