The capital asset pricing model (CAPM) is a financial model used to determine a security’s expected return considering its associated risk. Developed in the 1960s, CAPM has become an essential tool in ...
A group of our advisors attended a conference this past fall sponsored by Dimensional Fund Advisors. In his talk, “Risk Dimensions of the Market,” Eugene F. Fama reviewed the latest data on the ...
One of the key insights of the CAPM is that it answers an important investment question: "What is the expected return if I purchase security XYZ?" The assumption that Sharpe built into the model is ...
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How Do I Use the CAPM to Determine Cost of Equity?
What Is the Capital Asset Pricing Model? Corporate accountants and financial analysts often use the capital asset pricing model (CAPM) in capital budgeting to estimate the cost of shareholder equity.
Portions of this article were drafted using an in-house natural language generation platform. The article was reviewed, fact-checked and edited by our editorial staff. The capital asset pricing model ...
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