Let’s use the CAPM formula above to calculate the expected return (ER) of a stock over one year. Factoring these figures gives us an expected return of 16%. The market risk premium is (11 – 1. ...
Reviewed by Thomas Brock Fact checked by Suzanne Kvilhaug CAPM: An Overview Many investors use the capital asset pricing model (CAPM) as a way to estimate the potential return of a stock or other ...
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