Capital Asset Pricing Model (CAPM) Fundamentals

Understanding the relationship between risk and expected return is a cornerstone of modern financial theory and investment analysis. This text-based course breaks down the Capital Asset Pricing Model (CAPM) into clear, manageable concepts to help you evaluate securities and calculate the cost of equity with confidence. You will begin with essential investment terminology before moving step-by-step through core formulas, practical calculations, and portfolio risk assessment. By the end of this course, you will have a solid grasp of how theoretical finance frameworks apply to real-world asset valuation. What you'll learn: - Understand the core principles of modern portfolio theory, systematic risk, and unsystematic risk - Calculate expected returns using the Capital Asset Pricing Model formula - Determine and interpret beta coefficients as a measure of market volatility - Analyze the risk-free rate, market risk premium, and their impact on equity valuation - Apply CAPM principles to cost of capital estimations and corporate investment decisions - Evaluate the practical limitations and modern extensions of the model in current financial markets The course begins with foundational definitions of risk and return, builds through systematic calculations, and finishes with practical evaluation exercises. It is designed for beginners and finance students preparing for professional exams, requiring no prior valuation experience. Start reading today to build a strong foundation in investment finance.