CAPM Return Calculation Examples Help

CAPM Return Calculation Examples, Concept, Samples, Illustrations Help Online

 

Looking for CAPM Return Calculation Examples, Concepts and Illustrations help to do your assignments, homework or project then you are at the right place.
 

CAPM Return Calculation Examples Concept

 
The relationship between the required return and the systematic risk of an investment is established by capital asset pricing model.
 
There are two types of risk systematic risk and unsystematic risk. Systematic risk cannot be avoided as it is the risk created by the whole economy like risk of recession. It affects all investments. Unsystematic risk is the risk attached to a particular investment. Such risk can be neutralized by adding more investments to a portfolio. The formula of CAPM return is as follows
 
Required return = risk free rate + beta coefficient × equity risk premium
Risk free rate means an investment having zero risk.
Beta coefficient measures systematic risk.
Equity risk premium = broad market return – risk free rate
 

Services We Offer

Why Select Us

Finance Assignment Help Online Features

Zero Plagiarism
We believe in providing no plagiarism work to the students. All are our works are unique and we provide Free Plagiarism report too on requests.
Best Customer Service
Our customer representatives are working 24X7 to assist you in all your assignment needs. You can drop a mail to assignmentconsultancy.help@gmail.com or chat with our representative using live chat shown in bottom right corner.
Three Stage Quality Check
We are the only service providers boasting of providing original, relevant and accurate solutions. Our three stage quality process help students to get perfect solutions.
100% Confidential
All our works are kept as confidential as we respect the integrity and privacy of our clients.

Referral Program

Refer us and Earn up to 5000 USD

Place Order and generate unique Code
Whenever you make a payment. You are eligible for a referral code, just request in email so that you will get the code which you can share with your friends.

Earn Money
You will be eligible for referral bonus if your friend place the order using the same referral code using no other discounts after successful payment made by him.

Encash it or Use it in your next assignments
You can request the encashment as mentioned in step 2 or you can use it as a method of payment for your next assignments.

 

CAPM Return Calculation Examples Explanation

 
Let’s take an example to understand the calculation of CAPM return model.
 
Example: A Corporation has a beta coefficient of 0.68. Estimate its cost of equity if the risk-free rate is 2% and return on the broad market index is 6%.
 
Solution: Under capital asset pricing model,
Cost of equity = risk free rate + beta coefficient × (broad market return – risk free rate)
Cost of equity = 2% + 0.68 × (6% – 2%) = 2% + 0.68 x 4% = 0.028 or 2.8%
 
Want to know more about CAPM Return Calculation Examples, click here . You can visit us for more examples here.
 

Summary