Capital Asset Pricing Model (CAPM)
Here,
CAPM is used to find out the return expected from and stock.
- Exhibit showing Formula of CAPM
Formula: Rs=Rf+βs(Rm-Rf)
MRP refers to Market Risk Premium, which means the premium percentage of risk apart from market or index return.
E(rm) -Expected return from market or index. E(rs)- Expected return from Stock or share.
βs – Beta is the fundamental worth that events the oscillations of a stock to fluctuations of the total stock market.