CAPM Calculator

Find expected return with the Capital Asset Pricing Model.

Expected return (%) 10.2

Formula: E(R) = Rf + β × (Rm − Rf)

Step-by-step with your numbers:

1. Values used:

2. Risk-free rate = 3 %

3. Beta = 1.2

4. Market return = 9 %

6. Expected return = 10.2%

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CAPM estimates the return investors should require for a stock's risk.

The math behind it

E(R) = risk-free rate + beta × (market return − risk-free rate).

3% + 1.2 × (9% − 3%) → 10.2%.

Beta?

Measures volatility vs the market (1 = market average).