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Anudeep Maity 1923210 Business Finance Asynchronous Assignment (22-03-2021) The Capital Asset Pricing Model (CAPM) The Capital Asset Pricing Model (CAPM) describes the relationship between systematic risk and expected return for assets, particularly stocks. CAPM is widely used throughout finance for pricing risky securities and generating expected returns for assets given the risk of those assets and cost of capital. In capital budgeting, corporate accountants and financial analysts often use the capital asset pricing model (CAPM) to estimate the cost of shareholder equity. Determining the Cost of Equity with CAPM The CAPM formula requires only the following three pieces of information: