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 2.5%. NB: Click on [calculate CAPM] to obtain the required return. DO NOT press enter.

Enter the Beta value