CAPM capital asset pricing model

CAPM is the model that estimates the return a shareholder should demand from a stock. It starts from the return on a risk-free asset, usually the sovereign bond, and adds a premium proportional to that stock's market risk, measured by its beta. It is the standard way of working out the cost of equity that then feeds into the WACC.

See the full glossary · What the Celsmar financial terminal is

Definition for informational purposes. It is not financial advice nor a recommendation to buy or sell.