Free · Equity investment calculators 📈

Beta-Based Required Return Calculator

Evaluate the CAPM return model from beta and benchmark returns.

  • Formula & worked example
  • Private in your browser
  • No signup
Go to tool

Calculator inputs

Loading calculator…

How to use this calculator

  1. Enter the known values in the units shown. Results update as you type.
  2. Edit a calculated value to solve backwards, or lock a value to hold it fixed.
  3. Use the worked example to check the method. Reset restores the starting fields.

Use the result with context

Results are estimates for planning and education. Confirm rates, taxes, fees, and legal requirements with the relevant institution or a qualified professional before making a financial decision.

Formula and method

With a 3% risk-free rate, an 8% market return and beta of 1.2, the modeled risk premium is 6 percentage points and the required return is 9%.

Required return = risk-free rate + beta × (market return − risk-free rate)

Worked example

Enter these known values and leave the other values blank.

Risk-free interest rate
3 %
Broad market return
8 %
Beta
1.2
Risk premium of the asset
6 %
Modeled required return
9 %

Assumptions and limitations

  • It is an output of the capital asset pricing model under the supplied assumptions. Estimated beta and expected market returns are uncertain, and realized returns can differ substantially.
  • Use consistent periods, currency and accounting definitions. The result follows the stated formula and the figures you supply.

Common questions

Is the result a forecast of what I will earn?

It is an output of the capital asset pricing model under the supplied assumptions. Estimated beta and expected market returns are uncertain, and realized returns can differ substantially.

References

The calculation equations, inverse formulas, units, and input rules were imported from this source. Bookify provides the interface and equation solver.

Explore equity investment calculators 📈 or browse all finance calculators.