The Capital Asset Pricing Model (CAPM) describes the relationship between the expected return and risk on any asset or portfolio. It is basically used to calculate the stock’s expected stock return. CAPM suggests that a stock’s expected return is equal to the risk-free rate, plus beta multiplied by the market risk premium.
Some other related topics you might be interested to explore are Risk-free Rate, Beta, and Market Risk Premium.
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The Capital Asset Pricing Model is among the topics included in the Corporate Finance module of the CFA Level 1 Curriculum.
