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My understanding on CAPM.

My understanding on CAPM.

by Neamul Nasif -
Number of replies: 1

From my understanding CAPM aka Capital Asset Pricing Model is a model which shows both the risk and return and the relationship between them. As, a stock will never show how it is going to contribute to the risk and return so CAPM works like a portfolio in this case. Here the ER is risk free rate based on how the security takes systematic risks.