Finance Calculators

CAPM Calculator (Expected Return)

Calculate a stock's expected return using the Capital Asset Pricing Model (CAPM) from the risk-free rate, beta and market return.

Expected return —

About the CAPM Calculator (Expected Return)

The Capital Asset Pricing Model (CAPM) estimates the return investors should require from a stock given its riskiness relative to the overall market, as measured by beta.

Formula: Expected Return = Rf + β × (Rm − Rf), where Rf is the risk-free rate, β is the stock's beta, and Rm is the expected market return.

A beta above 1 means a stock is more volatile than the market and should demand a higher expected return to compensate; a beta below 1 means it's less volatile and investors should expect a lower premium.