Capital Asset Pricing Model, a financial model that calculates the expected return of an asset based on its systematic risk (beta) relative to the market. The formula is: Expected Return = Risk-free Rate + Beta × Market Risk Premium.
Acronym from Nobel Prize-winning theory developed by William Sharpe in 1960s. Combines 'capital' (Latin 'capitalis'), 'asset' (Old French 'assez'), 'pricing' (from 'price' via Latin 'pretium'), and 'model' (from Latin 'modulus' meaning measure).
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