Capm

Function Capm(rf,rm,beta:Numeric)

Calculates the expected stock return under the Capital Asset Pricing Model on a stock or list of stocks.

Example

Capm(0.08, 0.12, 1.5) → 0.14

Expects

rf (risk free rate), rm (market return), and beta (beta of individual stock) all as numbers.
Beta is the relative marginal contribution of the stock to the market return, defined as the ratio of the covariance between the stock return and market return, to the variance in the market return.

Function definition

rf + beta*(rm-rf)

Syntax

Capm(rf,rm,beta:Numeric)

Library

Financial functions

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