CAPM Calculator
Compute the expected return on an asset with CAPM from the risk-free rate, beta, and expected market return.
What this calculator does
The CAPM Calculator estimates your result instantly from the values you enter, using standard investing & wealth formulas. Compute the expected return on an asset with CAPM from the risk-free rate, beta, and expected market return. Calculations run in your browser, so nothing you type is sent to a server, and the output is an estimate for planning rather than financial advice.
Result
About CAPM Calculator
The CAPM Calculator applies the Capital Asset Pricing Model to estimate the expected return an investment should offer for its level of market risk. From the risk-free rate, the investment's beta, and the expected market return, it adds the risk-free rate to beta times the market risk premium.
CAPM is the most widely taught way to price risk: the market risk premium is the extra return investors demand over the risk-free rate, and beta scales that premium to the specific investment. The tool applies the model directly to the three figures you enter, with no further assumptions.
Enter the risk-free rate, the beta, and the expected market return, press Calculate, and read the expected return the model implies.
Formula & Mathematical Calculation
Expected Return = Risk-Free Rate + Beta × ( Expected Market Return − Risk-Free Rate )
Calculation Example
With a 4% risk-free rate, a beta of 1.2, and a 10% expected market return, the expected return is 4% + 1.2 × (10% − 4%) = 11.2%.
Key Benefits
- Estimates the expected return for an investment's level of market risk.
- Applies the Capital Asset Pricing Model exactly from your three inputs.
- Scales the market risk premium by beta to reflect the specific investment.
- Provides the discount rate commonly used as the cost of equity in valuation.
How to Use this Calculator
-
Enter the risk-free rate
Type the risk-free rate as a percentage in the Risk-Free Rate field, for example 4. -
Enter the beta
Type the investment's beta in the Beta field, for example 1.2. -
Enter the expected market return
Type the expected market return as a percentage in the Expected Market Return field, for example 10. -
Press Calculate
The tool adds the risk-free rate to beta times the market risk premium to return the expected return.
Assumptions & Limitations
What the calculation assumes
- Every value you enter is treated as an exact, known amount.
- Rates and contributions are assumed to stay constant for the whole period unless the form asks for them separately.
- Results use standard financial formulas and ignore fees, penalties and promotional terms that are not entered above.
- Inflation, tax changes and market volatility are not modelled unless a field for them is provided.
- Amounts are unit-agnostic: results are returned in the same currency you enter.
What it does not cover
- CAPM Calculator produces estimates for education and planning, not a quote, offer or professional advice.
- Real-world outcomes differ when fees, taxes, rounding rules or provider-specific terms apply.
- Local regulations and tax rules vary by country and change over time; verify current rules for your jurisdiction.
- Figures are only as accurate as the inputs you supply — check them before acting on the result.
- For decisions with lasting financial impact, confirm the numbers with a qualified professional.
Frequently Asked Questions
Free to use, no account needed. Calculations run in your browser, so nothing you type is sent to a server. Results are estimates — how we build and check our calculators.
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