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CAPM formula

Forums › ACCA Forums › ACCA FM Financial Management Forums › CAPM formula

  • This topic has 1 reply, 2 voices, and was last updated 4 years ago by John Moffat.
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    Posts
  • November 28, 2020 at 11:34 am #596834
    fiz90
    Member
    • Topics: 10
    • Replies: 14
    • ☆

    I have noticed some inconsistencies in the formula calculation in the bpp revision kit. In some answers they multiply the beta by the risk premium without deducting the risk free rate and in others they do deduct the risk free rate. It is rather confusing? I know in the lectures John specifically deducts it and the formula clearly tells us to do as much.

    November 28, 2020 at 5:26 pm #596929
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54752
    • ☆☆☆☆☆

    But I do also say in the lectures that the risk premium is the difference between the return on equity and the risk free rate. 🙂

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