Skip to content
Finance Calculators

CAPM Calculator

Verified formula Updated Jun 2026 Private — runs on your device

Enter details
%
%
Verified formula Private

Expected return (CAPM)

13.000%

Equity risk premium
6.000%

For general information only — not financial, tax, legal or medical advice. Verify before you rely on it.

How to use the CAPM Calculator

The CAPM Calculator works out your expected return (capm), along with 1 related figure in an instant. Enter risk-free rate, beta and expected market return and the result updates as you type — it is free, needs no sign-up, and runs entirely in your browser so your figures stay private.

  1. Enter the risk-free rate.
  2. Enter the beta.
  3. Enter the expected market return.
  4. Read off your expected return (capm), together with equity risk premium — the calculator updates automatically, with no button to press.

Formula

The CAPM Calculator uses the formula:

Expected return (CAPM) = Risk-free rate + Beta × (Expected market return - Risk-free rate)

Worked example

For example, with risk-free rate of 7%, beta of 1.2 and expected market return of 12%, the expected return (capm) is 13.000%.

Inputs used
Risk-free rate 7%
Beta 1.2
Expected market return 12%
Results
Expected return (CAPM) 13.000%
Equity risk premium 6.000%

Results are estimates for educational use, not professional advice.

Frequently asked questions

The Capital Asset Pricing Model estimates the return investors should expect for the risk taken: expected return = risk-free rate + beta × (market return − risk-free rate).

Beta measures how much an asset moves relative to the market. A beta of 1 moves with the market; above 1 is more volatile and below 1 is less volatile.

It is the return on a virtually risk-free asset, often a government bond yield. It is the baseline before adding any risk premium.

It is the extra return over the risk-free rate for taking on market risk, equal to beta × (market return − risk-free rate).

The CAPM Calculator uses the formula: Expected return (CAPM) = Risk-free rate + Beta × (Expected market return - Risk-free rate). For example, with risk-free rate of 7%, beta of 1.2 and expected market return of 12%, the expected return (capm) is 13.000%.

Enter the risk-free rate. Enter the beta. Enter the expected market return. Read off your expected return (capm), together with equity risk premium — the calculator updates automatically, with no button to press.

Related calculators