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Capital Asset Pricing Model

   Also found in: Financial, Acronyms, Wikipedia 0.04 sec.

Capital Asset Pricing Model

Mathematical pricing model used in portfolio theory – a defensive strategy that attempts to evaluate and minimize investment risk – that examines the relationship between risk and expected return. The return on an investment is its risk premium added to its risk-free rate (the rate of return on an investment with no risk such as a treasury bill). The risk premium is the difference between the market rate of return and the risk-free rate, multiplied by the beta of the share.



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? Mentioned in ? References in periodicals archive
 
The most commonly accepted method in finance is the capital asset pricing model (CAPM).
Assessing new project risk by determining new project beta values by Tarantino, David / Physician Executive
Beginning with the 2006 price setting, the Board will use only a capital asset pricing model (CAPM) to determine a return on equity (ROE) that reflects the return earned by private-sector service providers.
Modifications to methodology used to calculate private-sector ... by Federal Reserve Bulletin
The capital asset pricing model (CAPM), first introduced by Sharpe (1964) and Lintner (1966), has made a profound impact on the way investors understand the relationship between price and risk of capital assets.
Time-series analysis of return and beta in U.S by Park, Kwang Woo / Journal of Academy of Business and Economics
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