Reviewed by Thomas Brock Fact checked by Suzanne Kvilhaug CAPM: An Overview Many investors use the capital asset pricing model (CAPM) as a way to estimate the potential return of a stock or other ...

For simplicity, assume no inflation. Basically, the real yield on long-term treasuries is Rf. The expected return on equities is ERi, which is the risk-free rate plus the premium investors demand in ...