One simple but powerful method investors can use to assess the risk and reward of a stock portfolio is using the Capital Asset Pricing Model, or CAPM, model for expected returns.

Key Takeaways The capital asset pricing model (CAPM) is used to calculate expected returns given the cost of capital and risk of assets.

Learn how to calculate the cost of equity in Microsoft Excel using the capital asset pricing model, or CAPM, including brief definitions of each component.

Learn about the components of the capital asset pricing model (CAPM), and discover how to calculate a company's cost of equity financing with this formula.