CAPM Calculator: Introduction

The CAPM Calculator can be used to solve problems based upon the Security Market Line (SML) from the Capital Asset Pricing Model. The calculator is able to solve for any of the four possible variables given the value of the other three variables.

1. Expected Return on Stock i Field - The Expected Return on Stock i is displayed or entered in this field.
2. Risk Free Rate Field - The Risk Free Rate is displayed or entered in this field.
3. Expected Return on the Market Field - The Expected Return on the Market Portfolio is displayed or entered in this field.
4. Beta for Stock i Field - The Beta for Stock i is displayed or entered in this field.
5. Buttons - Press these buttons to calculate the corresponding value.
   • E[R_i] Button - Press to calculate the Expected Return on Asset i.
   • Rf Button - Press to calculate the Risk Free Rate.
   • E[R_m] Button - Press to calculate the Expected Return on the Market Portfolio.
   • Beta Button - Press to calculate the Beta for Asset i.

Now you are ready to use the CAPM Calculator.