CAPM Calculator
Calculate expected asset return using Capital Asset Pricing Model
CAPM Parameters
Government treasury bond yield
Asset volatility vs market (1.0 = market average)
Expected return of market portfolio
Calculation Results
CAPM Formula:
Calculation Steps:
When to Use CAPM Calculator
Stock Valuation
Determine fair value of stocks by calculating expected returns based on systematic risk and market conditions.
Portfolio Management
Optimize portfolio allocation by comparing expected returns of different assets relative to their risk levels.
Cost of Equity Calculation
Calculate cost of equity for WACC analysis in corporate finance and business valuation projects.
Investment Analysis
Evaluate investment opportunities by comparing actual returns against CAPM-predicted returns for alpha generation.
Academic Research
Support financial research and academic studies with precise CAPM calculations and risk-return analysis.
Risk Assessment
Quantify systematic risk exposure and determine appropriate risk premiums for investment decision making.
Frequently Asked Questions
What is CAPM Calculator?
CAPM Calculator is a financial tool that calculates the expected return of an asset using the Capital Asset Pricing Model formula: Expected Return = Risk-free Rate + Beta × (Market Return - Risk-free Rate). It helps investors determine whether an investment offers adequate return for its risk level.
How do I use the CAPM Calculator?
Enter three key parameters: the risk-free rate (typically government bond yield), asset beta coefficient (volatility measure), and expected market return. The calculator instantly computes the expected return, risk premium, and provides detailed calculation steps with formula breakdown.
Is this CAPM Calculator free to use?
Yes, our CAPM Calculator is completely free with no registration required. Calculate unlimited asset returns, access detailed explanations, and download results at no cost. All calculations are performed instantly in your browser.
What is Beta in CAPM calculation?
Beta measures an asset's volatility relative to the overall market. Beta = 1 means the asset moves with the market, Beta > 1 indicates higher risk and potential return, while Beta < 1 suggests lower risk. Beta values can be found on financial websites or calculated using historical price data.
Where can I find risk-free rate data?
Risk-free rates are typically based on government treasury bills or bonds. Check financial websites like Yahoo Finance, Bloomberg, Federal Reserve websites, or government treasury departments for current rates. Use rates matching your investment time horizon.
What are the limitations of CAPM?
CAPM assumes perfect markets, constant risk-free rates, and normal distribution of returns. It only considers systematic risk and may not reflect real market conditions, multiple risk factors, or behavioral aspects. Use CAPM alongside other valuation methods for comprehensive analysis.
How accurate are CAPM predictions?
CAPM provides theoretical expected returns based on historical relationships. Actual returns may differ due to market inefficiencies, changing economic conditions, and company-specific factors. Use CAPM as a baseline for comparison rather than precise prediction.
Can I save or export my calculations?
Yes, use the Copy button to copy results to clipboard or Download button to save calculations as a text file. Results include all input parameters, calculated values, formula breakdown, and interpretation for your records.
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