Many investors use the capital asset pricing model (CAPM) as a way to estimate the potential return of a stock or other asset within the context of its intrinsic risk. Used primarily to analyze ...

The traditional formula for the cost of equity is the dividend capitalization model and the capital asset pricing model (CAPM). The cost of equity is the return that a company requires for an ...

For simplicity, assume no inflation. Basically, the real yield on long-term treasuries is Rf. The expected return on equities is ERi, which is the risk-free rate plus the premium investors demand in ...

But did you know this relationship is a central principle in finance? It's captured by the capital asset pricing model (CAPM), which quantifies the market risk premium – the difference between ...

Mullins, David W., Jr. "Financial Leverage, the Capital Asset Pricing Model and the Cost of Equity Capital." Harvard Business School Background Note 280-100, March 1980. (Revised October 1980.) ...

Mullins, David W., Jr. "Diversification, the Capital Asset Pricing Model, and the Cost of Equity Capital." Harvard Business School Background Note 276-183, March 1976. (Revised November 1993.) ...