CAPM Formula Template
Over 1.8 million professionals use CFI to learn accounting, financial analysis, modeling and more. Start with a free account to explore 20+ always-free courses and hundreds of finance templates and cheat sheets.
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 Model (CAPM) describes the relationship between expected return and risk of investing in a security. It shows that the expected return on a security is equal to the risk-free return plus a risk premium, which is based on the beta of that security.
The formula for calculating CAPM is as follow:
Expected return on a security = Risk-free rate + Beta of the security * (Expected return on market – Risk-free rate)
It is based on the premise that investors have assumptions of systematic risk (also known as market risk or non-diversifiable risk) and need to be compensated for it in the form of a risk premium – an amount of market return greater than the risk-free rate. By investing in a security, investors want a higher return for taking on additional risk.
More Free Templates
For more resources, check out our business templates library to download numerous free Excel modeling, PowerPoint presentation, and Word document templates.
Analyst Certification FMVA® Program
Below is a break down of subject weightings in the FMVA® financial analyst program. As you can see there is a heavy focus on financial modeling, finance, Excel, business valuation, budgeting/forecasting, PowerPoint presentations, accounting and business strategy.
A well rounded financial analyst possesses all of the above skills!
Additional Questions & Answers
CFI is the global institution behind the financial modeling and valuation analyst FMVA® Designation. CFI is on a mission to enable anyone to be a great financial analyst and have a great career path. In order to help you advance your career, CFI has compiled many resources to assist you along the path.
In order to become a great financial analyst, here are some more questions and answers for you to discover:
- What is Financial Modeling?
- How Do You Build a DCF Model?
- What is Sensitivity Analysis?
- How Do You Value a Business?
