Portfolio management and asset pricing, Financial Management

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2/14/2013 4:20:30 AM

Portfolio Management - The Capital Asset Pricing Model (CAPM)

The capital asset pricing model that is abbreviated as CAPM is a model that computes expected return based upon expected rate of return on the market, the risk-free rate and the beta coefficient of the stock.


E(R) = Rf + β ( Rmarket - Rf )

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