How to Calculate CAPM

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Summary: Calculate CAPM, or capital asset pricing model, by taking the risk-free rate of a security and multiplying it by the risk premium. Figure out the average risk for a security by using the CAPM with information from a certified public accountant in this free video on accounting.

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By Miranda Chook
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Miranda Chook is a CPA with expertise in international operations. She has held executive positions with both publicly listed and privately held companies. In addition to her finance...read more

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Video Transcript

"My name is Miranda Chook, a CPA. The capital asset pricing model depicts the, the concept of investment risk of a security with the expected return of that security. And it is calculated by taking the risk free rate of a security times a risk premium, and the risk premium is calculated as the beta of a security times a risk premium for securities of so called "average risk." So if you are interested in a specific security, you can take a look at the analysis including the CAPM that's been done by a company's own analyst or analysts following the company's stock."

eHow Article: How to Calculate CAPM

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