CAPM is that Capital Asset Pricing Model. CAPM is nothing but the exam. CAPM is the model that describes the relationship between the risk and the expected return and that is also used in the pricing of the risky securities. The general idea about the CAPM was investors need to be compensate in to two ways: time value of the money and the risk.The capital asset pricing model (CAPM) is also used to calculate the required rate of return for any risky asset. Your can required the rate of return is the increase in value you should expect to see based on the impact on the risk level of the asset.The Capital Asset of the Pricing Model Definition and Underlying Assumptions In the finance, one of the most important thing is to remember is that return is a function of the risk. This means that the more risk you can take and the higher your potential return should be to offset your increased chance for the loss.
