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Capital Asset Pricing Model

   Also found in: Financial, Acronyms, Wikipedia 0.06 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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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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