What is the full form of CAPM?
- on Jun 20, 2022
CAPM stands for Capital Asset Pricing Model.
|Full Form||Capital Asset Pricing Model|
|Category||Business » Finance|
What is CAPM?
Capital Asset Pricing Model (CAPM) is a mathematical model that helps to explain how stock prices change over time.
The capital asset pricing model (CAPM) is a mathematical model that helps to explain how stock prices change over time. It was developed by Harry Markowitz in the 1950s. CAPM is based on the theory that investors are risk averse and will always choose the safest investment option available.
CAPM is a two-factor model. The first factor is the rate of return on the investment. The second factor is the level of risk involved in the investment. CAPM assumes that investors are rational and want to make maximum profits.
CAPM can be used to calculate the expected return on an investment and the risk associated with it. This information can then be used to decide whether or not to invest in a particular company or security.