Corporate Finance
The Capital Asset Pricing Model (CAPM) is a financial model that establishes a relationship between the expected return of an asset and its systematic risk, represented by beta. It helps investors understand how much return they should expect for taking on the risk of investing in a particular asset, while providing a framework for evaluating the cost of capital and making investment decisions based on risk and return. This model is crucial for determining the cost of equity and assessing investment opportunities in relation to their risk profiles.
congrats on reading the definition of Capital Asset Pricing Model (CAPM). now let's actually learn it.