Remove Market Risk Remove Systematic Risk Remove Weighted Average Cost of Capital
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What is the Capital Asset Pricing Model (CAPM)?

Andrew Stolz

Beta is a multiple used to adjust up (Beta > 1) the equity risk premium if a stock is expected to be riskier than the market, and down (Beta < 1) if the stock is lower risk than the market. What Impacts the Capital Asset Pricing Model? These risks can be reduced through the diversification of a portfolio.