CAPM CALCULATION
The required return on XYZ stock can be estimated using the
Capital Asset Pricing Model (CAPM).
Keep in mind this approach is only one of many methods for
determining a required return.
Once you have calculated a required return, you may use various
discounting methods for determining the fair value of a particular security.
In the box below, enter the beta for a particular stock and
an alert box will give you the required return, based on the historic market
risk premium of 6.6% and a risk free rate of 4.5%.