capital asset pricing model

( CAPM)
An economic theory that describes the relationship between risk and expected return, and serves as a model for the pricing of risky securities. The CAPM asserts that the only risk that is priced by rational investors is systematic risk, because that risk cannot be eliminated by diversification. The CAPM says that the expected return of a security or a portfolio is equal to the rate on a risk-free security plus a risk premium multiplied by the asset's systematic risk. Theory was invented by William Sharpe (1964) and John Lintner (1965). The early work of Jack Treynor is was also instrumental in the development of this model. Bloomberg Financial Dictionary

* * *

capital asset pricing model capital asset pricing model model

* * *

   ► See CAPM.

* * *

capital asset pricing model UK US noun [C] (ABBREVIATION CAPM)
FINANCE a method of calculating the value of an investment using the relationship between risk and the amount of profit that an investor expects to make: »

The article examines the capital asset pricing model for the Greek stock market using weekly stock returns from 100 companies listed on the Athens stock exchange.


Financial and business terms. 2012.

Look at other dictionaries:

  • Capital Asset Pricing Model — Saltar a navegación, búsqueda El Capital Asset Pricing Model, o CAPM (trad. lit. Modelo de Fijación de precios de activos de capital) es un modelo frecuentemente utilizado en la economía financiera. El modelo es utilizado para determinar la tasa… …   Wikipedia Español

  • Capital asset pricing model — In finance, the Capital Asset Pricing Model (CAPM) is used to determine a theoretically appropriate required rate of return of an asset, if that asset is to be added to an already well diversified portfolio, given that asset s non diversifiable… …   Wikipedia

  • Capital asset pricing model — Modèle d évaluation des actifs financiers Pour les articles homonymes, voir CAPM. Le Modèle d évaluation des actifs financiers (MEDAF), traduction approximative[1] de l anglais Capital Asset Pricing Model (CAPM) fournit une estimation de valeur… …   Wikipédia en Français

  • capital asset pricing model — Econ a model of the market used to assess the cost of capital for a company based on the rate of return on its assets. EXAMPLE The capital asset pricing model holds that the expected return of a security or a portfolio equals the rate on a risk… …   The ultimate business dictionary

  • Capital Asset Pricing Model — Das Capital Asset Pricing Model (CAPM) (zu deutsch: Preismodell für Kapitalgüter bzw. Kapitalgutpreismodell) ist ein Kapitalmarktgleichgewichtsmodell, das die Portfoliotheorie um die Frage erweitert, welcher Teil des Gesamtrisikos eines… …   Deutsch Wikipedia

  • Capital Asset Pricing Model — El Capital Asset Pricing Model, o CAPM (trad. lit. modelo de valuación de activos de capital) es un modelo frecuentemente utilizado en la economía financiera. Sugiere que, cuanto mayor es el riesgo de invertir en un activo, tanto mayor debe ser… …   Enciclopedia Universal

  • capital asset pricing model — kapitalo įkainojimo modelis statusas T sritis turto vertinimas apibrėžtis Modelis, pagal kurį akcijų ar akcijų portfelio kapitalo kaina yra lygi nerizikingai palūkanų normai, pridėjus akcijų ar akcijų portfelio sistemos riziką atitinkantį rizikos …   Lithuanian dictionary (lietuvių žodynas)

  • capital asset pricing model — CAPM A model that can be used to calculate the expected or average return on an investment. It assumes that this return will be composed of the risk free rate of return and a risk premium. Formally, the CAPM is based on the equation: E(Ri) = Rf + …   Accounting dictionary

  • capital asset pricing model — CAPM A statistical model to explain the expected or average return on an investment. It assumes that this return will be composed of the risk free rate of return and a risk premium The risk premium is related to those systematic risks that cannot …   Big dictionary of business and management

  • capital asset pricing model — CAPM A theoretical framework in financial economics for analysis of the relationships between the *risks and *returns of securities. CAPM suggests that securities’ *prices tend to adjust to ensure that securities’ returns adequately reward… …   Auditor's dictionary

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.