BizJourney
Home › Formulas › Required return (CAPM)

How to calculate Required return (CAPM)

The Required return (CAPM) formula, with plain worked examples you can check yourself.

Required return (CAPM) = Rf + β × (Rm − Rf)

The result is a percentage (%).

Worked examples

Rf = 3% · β = 1 · Rm = 9%Required return (CAPM) = 9%
Rf = 3% · β = 2 · Rm = 7%Required return (CAPM) = 11%
Rf = 3% · β = 1.5 · Rm = 7%Required return (CAPM) = 9%

How to use it

  1. Write down the values for each letter in the formula.
  2. Do the brackets first, then divide or multiply.
  3. Check the units before you compare results.
  4. Compare the answer with last period or with a competitor to see if it is good or bad.

This formula belongs to Investing & Returns.

Related terms

DividendBondHedgingArbitrageLeverageAsset allocation

Practice Required return (CAPM) with real numbers

Quizzes, a CEO simulator, a real estate tycoon game and startup tools. Free to start, in 7 languages.

Play BizJourney free →