The CAPM formula describes the expected return for investing in a security that’s equal to the risk-free return plus a risk premium. In the formula, the risk premium—a rate of return that’s ...

The two main formulas for determining the cost of equity are the capital asset pricing model (CAPM) and dividend discount model (DDM). Each formula serves a different purpose, with CAPM being the ...

The CAPM requires the following inputs ... investors can rearrange the formula into: Investment decisions are found in corporate finance. When a company invests in an expansion or marketing ...