How to Use CAPM Calculator
The CAPM Calculator estimates expected return using the capital asset pricing model. Enter the risk-free rate, asset beta, and expected market return. The result shows CAPM expected return, market risk premium, beta-adjusted risk premium, and beta.
Use the CAPM Calculator for investment analysis, portfolio management, valuation assumptions, and finance education.
Formula & Theory — CAPM Calculator
The CAPM Calculator uses the standard formula:
Expected Return = Risk-Free Rate + Beta * (Market Return - Risk-Free Rate)
| Symbol | Meaning |
|---|---|
| Risk-Free Rate | Return from a low-risk benchmark asset |
| Beta | Asset sensitivity to market movement |
| Market Return | Expected return of the broader market |
The market risk premium is the extra return expected from the market over the risk-free rate. The CAPM Calculator scales that premium by beta to estimate the asset return required for systematic risk.
Use Cases for CAPM Calculator
The CAPM Calculator is useful for:
- Stock valuation — Build a discount rate assumption for equity analysis.
- Portfolio review — Compare expected return with market sensitivity.
- Finance learning — Understand beta and market risk premium.
- Investment screening — Check whether expected return compensates for risk.
The CAPM Calculator gives a compact way to connect market risk with theoretical expected return.