{"success":true,"version":"v1","request":{"tool":"get_calculator_schema","calculator_id":"capm"},"result":{"entity_type":"calculator","id":"capm","calculator_id":"capm","canonical_url":"https://tttkmbb.com/investing/capm","name":"CAPM Calculator","title":"CAPM Calculator – Expected Return from Beta, Risk-Free Rate and Market Return","category":"investing","category_name":"Investing & Real Estate","tool_name":"calculate_capm_expected_return","featured_mcp_tool":false,"description":"Computes the expected return of an asset with the capital asset pricing model (CAPM) from the risk-free rate, the asset's beta and the expected market return, plus the equity risk premium and the beta-scaled premium.","use_when":"You need a required or expected return for a stock or portfolio given its beta, for example as the cost of equity in a DCF or WACC calculation.","do_not_use_when":"The asset's beta is unknown or unstable, or you need a multi-factor return (Fama-French) rather than the single-factor CAPM. Informational only; not financial advice.","inputs":[{"name":"risk_free_rate_percent","label":"Risk-free rate","type":"number","unit":"% per year","required":true,"min":-20,"max":100,"description":"Yield on a risk-free instrument such as a government bond, in percent.","example":3},{"name":"beta","label":"Beta","type":"number","required":true,"min":-10,"max":10,"description":"Sensitivity of the asset's returns to the market (1 = moves with the market, 0 = uncorrelated).","example":1.2},{"name":"market_return_percent","label":"Expected market return","type":"number","unit":"% per year","required":true,"min":-100,"max":200,"description":"Expected annual return of the market portfolio in percent.","example":8}],"outputs":[{"name":"expected_return_percent","label":"Expected return","type":"number","unit":"%","decimals":2,"description":"risk_free_rate + beta × (market_return − risk_free_rate)."},{"name":"equity_risk_premium_percent","label":"Equity risk premium","type":"number","unit":"%","decimals":2,"description":"market_return − risk_free_rate."},{"name":"beta_premium_percent","label":"Beta-adjusted premium","type":"number","unit":"%","decimals":2,"description":"beta × equity risk premium: the return earned above the risk-free rate."}],"input_schema":{"type":"object","properties":{"risk_free_rate_percent":{"description":"Yield on a risk-free instrument such as a government bond, in percent. Unit: % per year.","type":"number","minimum":-20,"maximum":100,"examples":[3],"x-unit":"% per year"},"beta":{"description":"Sensitivity of the asset's returns to the market (1 = moves with the market, 0 = uncorrelated).","type":"number","minimum":-10,"maximum":10,"examples":[1.2]},"market_return_percent":{"description":"Expected annual return of the market portfolio in percent. Unit: % per year.","type":"number","minimum":-100,"maximum":200,"examples":[8],"x-unit":"% per year"}},"additionalProperties":false,"required":["risk_free_rate_percent","beta","market_return_percent"]},"output_schema":{"type":"object","properties":{"expected_return_percent":{"description":"risk_free_rate + beta × (market_return − risk_free_rate). Unit: %.","type":"number","x-unit":"%"},"equity_risk_premium_percent":{"description":"market_return − risk_free_rate. Unit: %.","type":"number","x-unit":"%"},"beta_premium_percent":{"description":"beta × equity risk premium: the return earned above the risk-free rate. Unit: %.","type":"number","x-unit":"%"}}},"formula":"expected_return_percent = risk_free_rate_percent + beta × (market_return_percent − risk_free_rate_percent)","method":"Single-factor CAPM (Sharpe 1964, Lintner 1965): only systematic (market) risk is rewarded; beta is usually estimated from 2–5 years of historical returns and the premium from long-run market history. Informational mathematics only; not financial advice.","sources":[{"name":"Wikipedia – Capital asset pricing model","url":"https://en.wikipedia.org/wiki/Capital_asset_pricing_model","type":"reference","retrieved_at":"2026-09-24"},{"name":"Wikipedia – Modern portfolio theory","url":"https://en.wikipedia.org/wiki/Modern_portfolio_theory","type":"reference","retrieved_at":"2026-09-24"}],"freshness":{"type":"static","max_age_seconds":null,"note":"Deterministic formula with fixed constants; results never go stale. Inputs supplied by the caller determine the output."},"examples":[{"name":"rf 3 %, beta 1.2, market 8 %","inputs":{"risk_free_rate_percent":3,"beta":1.2,"market_return_percent":8},"expected":{"expected_return_percent":9,"equity_risk_premium_percent":5,"beta_premium_percent":6},"url":"https://tttkmbb.com/api/v1/calculate/capm?risk_free_rate_percent=3&beta=1.2&market_return_percent=8"},{"name":"rf 4 %, beta 0.8, market 10 %","inputs":{"risk_free_rate_percent":4,"beta":0.8,"market_return_percent":10},"expected":{"expected_return_percent":8.8,"equity_risk_premium_percent":6,"beta_premium_percent":4.8},"url":"https://tttkmbb.com/api/v1/calculate/capm?risk_free_rate_percent=4&beta=0.8&market_return_percent=10"}],"faq":[{"q":"What does a beta above 1 mean?","a":"The asset has moved more than the market: a beta of 1.2 implies returns about 20 % more volatile than the market, so CAPM demands a proportionally higher premium."},{"q":"Is the CAPM return a forecast?","a":"No. It is the return that compensates for systematic risk under the model's assumptions; realised returns differ, and the model ignores size, value and momentum effects."}],"tags":["capm","expected return","beta","cost of equity","equity risk premium"],"related":[{"calculator_id":"wacc","reason":"Use the CAPM return as the cost of equity in the weighted average cost of capital."},{"calculator_id":"sharpe-ratio","reason":"Risk-adjusted return of a realised portfolio."},{"calculator_id":"dcf-valuation","reason":"Discount cash flows at the required return."}],"links":{"html":"https://tttkmbb.com/investing/capm","markdown":"https://tttkmbb.com/investing/capm.md","json":"https://tttkmbb.com/investing/capm.json","api":"https://tttkmbb.com/api/v1/calculate/capm","schema":"https://tttkmbb.com/api/v1/calculators/capm","openapi":"https://tttkmbb.com/openapi.json","mcp":"https://tttkmbb.com/mcp"},"version":"v1","updated_at":"2026-09-24"},"timestamp":"2026-09-24T03:44:16Z"}