CAPM Required Rate of Return Formula - Economic Benefits


Formula :
E[Ri] = Rf + (RM - Rf) * βi

Rf = ( R - RM * βi) / (1-βi)

E[RM] = Rf + (Ri - Rf) / βi

βi = (Ri - Rf) / (RM - Rf)


Where,

E[Ri] = Expected Return on Stock
Rf = Risk Free Rate
E[Rm] = Expected Return on the Market
βi = Beta for Stock

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