In Exhibit 3, the line labeled "Standard CAPM" depicts this relationship using the assumptions of the example that I present here. In the standard CAPM, this line is called the security market line.

The example above, for instance, calculates the CAPM of Tesla and General Motors for comparison. Tesla stock's actual beta was about 2.51 as of March 23, 2025, and General Motors' beta was 1.43.

The one-factor model, called the capital asset pricing model (CAPM), ... For example, a stock with a beta of 2.0 will go up twice the market premium when the stock market goes up.

The Capital Asset Pricing Model, abbreviated as CAPM, was developed by William Sharpe, ... CAPM Example. The Risk-Free rate of return generally uses U.S. Treasury yields by default.

The Capital Asset Pricing Model (CAPM) offers a good starting point for stock analysis. Here we explore what CAPM is, examples, and how it works.

The CAPM analysis might estimate that a portfolio should earn 10% based on the portfolio’s risk profile. If the portfolio actually earns 15%, the portfolio’s alpha would be 5.0, or +5% over ...

By applying the CAPM, an appraiser will arrive at a discount rate for equity, ... For example, if debt and equity are weighted 50% each and the cost of debt is 10% and the cost of equity is 24.8% and ...

The capital asset pricing model (CAPM) ... For example, consider a company with a beta of 1.3, meaning that its stock price is 30% more volatile than the overall market.

Large-cap Example: 2.5 + 1.0(6.0 - 2.5) = 6.0% Below is a chart showing the bond yields for the BRICs and Mexico. The data in this chart is from the closing price of the 20th until the closing ...