### 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

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

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.

ERi

ERm

Rf

betai

Precision

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