CAPM Formula Template
CAPM Formula Template This CAPM formula template will help you calculate the required rate of return for investing in a security given the risk-free return and risk premium. This is what the CAPM template looks like: Download the Free Template Download CFI’s free Excel template now to advance your finance knowledge. The Capital Asset Pricing...
Equity Value
What is Equity Value? Equity value, commonly referred to as the market value of equity or market capitalization, can be defined as the total value of the company that is attributable to equity investors. It is calculated by multiplying a company’s share price by its number of shares outstanding. Alternatively, it can be derived by...
Gordon Growth Model
What is the Gordon Growth Model? The Gordon Growth Model – otherwise described as the dividend discount model – is a stock valuation method that calculates a stock’s intrinsic value. Therefore, this method disregards current market conditions. Investors can then compare companies against other industries using this simplified model. Myron J. Gordon (Source: Globe and...
Terminal Growth Rate
What is the Terminal Growth Rate? The terminal growth rate is the constant rate at which a firm’s expected free cash flows are assumed to grow indefinitely. This growth rate is used beyond the forecast period in a discounted cash flow model, from the end of the forecasting period in perpetuity, we will assume that...
Arbitrage Pricing Theory
What is the Arbitrage Pricing Theory? The Arbitrage Pricing Theory (APT) is a theory of asset pricing that holds that an asset’s returns can be forecasted with the linear relationship of an asset’s expected returns and the macroeconomic factors that affect the asset’s risk. The theory was created in 1976 by American economist, Stephen Ross....
