Sensitivity of the expected excess asset returns(given the expected return and the risk-free rate of interest)

Formula

Sensitivity of the expected excess asset returns(given the expected return and the risk-free rate of interest) formula
betai
sensitivity of the expected excess asset returns to the expected excess market returns
ERi
expected return on the capital asset
ERm
expected return of the market
Rf
risk-free rate of interest

Formula description

In finance, the capital asset pricing model (CAPM) is used to determine a theoretically appropriate required rate of return of an asset, if that asset is to be added to an already well-diversified portfolio, given that asset's non-diversifiable risk.

Calculator (how to use calculator?)

Sensitivity of the expected excess asset returns(given the expected return and the risk-free rate of interest) formula
ERi
ERm
Rf
betai
Precision

Formula code

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References

  1. wikipedia:Capital asset pricing model.

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