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 2.5%.
 
 

Enter the Beta value