Fundamentals Toolkit
CAPM Calculator
CAPM is a simple way to estimate what return you should expect for the level of market risk you’re taking. It’s not a crystal ball — it’s a baseline “price of risk” check for Fiscal Investors.
CAPM Formula:
E(Ri) = Rf + β × (E(Rm) − Rf)
Where Rf = risk-free rate, β = beta, and E(Rm) = expected market return.
Inputs Adjust & Learn
Typically a U.S. Treasury yield (ex: 10-year). This is your “baseline” return for taking near-zero risk.
A long-run equity market assumption (often ~8–10% nominal, depending on your planning approach).
β = 1 moves with the market. β > 1 is more volatile. β < 1 is more defensive.
Fiscal Investor reminder: CAPM is a starting point. Pair it with fundamentals (cash flow, balance sheet, valuation)
before you trust a “required return.”
Results Expected Return
Expected Return E(Ri)
11.10%
Market Premium (Rm − Rf)
5.50%
Risk Premium (β × Premium)
6.60%
Calculation breakdown
Security Market Line (SML) Risk ↔ Return
The SML shows the relationship between beta and expected return. Your selected beta is highlighted.
β < 1 (Defensive)
Less volatile than the market. Often steady cash-flow businesses.
β = 1 (Market)
Moves with the market. Think broad index exposure.
β > 1 (Aggressive)
More volatile than the market. Higher swings — up and down.
Want to level up your analysis? Pair CAPM with our Financial Statement Red Flags checklist
so your “expected return” is grounded in business reality, not vibes.
View Red Flags Checklist →