CAPM (Capital Asset Pricing Model)

Advanced Financial Analysis

A financial model that relates an investment's expected return to its systematic risk (beta) and the equity risk premium, providing a formula for the cost of equity capital.

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Unit 02: the price of risk

Advanced Financial Analysis

Related Terms

Beta

A measure of how much an asset's price moves relative to the...

Equity risk premium

The additional return that investors demand for holding equi...

Systematic risk

Risk that affects the entire market and cannot be eliminated...