Series 66: Capital Asset Pricing Model (CAPM)

Taken from our Series 66 - NASAA Uniform Combined State Law Exam

Definition of the term Capital Asset Pricing Model (CAPM)...

a formula used to determine a company's cost of equity for purposes of calculating WACC. The calculation for cost of equity using CAPM is: cost of equity = risk-free rate of return + (beta * market risk premium).

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