CAPM Beta Calculator

Enter the expected return from your investment, the expected return of the market, and risk-free return to determine the CAPM beta.

• CAPM (Capital Asset Pricing Model) Calculator
• Risk Premium Calculator
• Levered Beta Calculator
• Expected Rate of Return Calculator

CAPM Beta Formula

The following formula is used to calculate a CAPM beta.

B = (ERi - rf ) / (ERm - rf) 

• Where B is the beta
• ERi is the expected return of the investment
• ERm is the expected return of the market
• rf is the risk-free return

To calculate a CAPM beta, subtract the expected market return from the expected investment return, then divide by the result of the market return minus the risk-free return.

CAPM Beta Definition

A CAPM beta is a coefficient used in the capital asset pricing model to describe the ratio of the return of an investment compared to the return of the market relative to a risk-free investment.

Can CAPM Beta be negative?

CAPM beta can be negative if the expected return of the investment or expected return of the market is less than the risk-free return. In reality, this almost never happens unless you have a poor investment, but it is entirely possible.

What does beta mean in CAPM?

Beta in CAPM is a measure of how good your investment is performing compared to the market, but relative to some risk-free asset. The higher the beta the better performing your asset is, or the worse performing the overall market is compared to your investment.

What is zero beta CAPM?

A zero beta CAPM is a model in which the return on investment is equal to that of a risk-free return. This results in a beta of zero.

Is CAPM beta levered or unlevered?

More often than not, CAPM beta is considered to be unlevered.

CAPM Beta Example

FAQ