In other words, the more risk you take on, the higher returns you hope to earn. The capital asset pricing model (CAPM) helps investors understand the returns they can expect given the level of ...
Mullins, David W., Jr. "Financial Leverage, the Capital Asset Pricing Model and the Cost of Equity Capital." Harvard Business School Background Note 280-100, March 1980. (Revised October 1980.) ...
Merton, Robert C. "A Dynamic General Equilibrium Model of the Asset Market and Its Application to the Pricing of the Capital Structure of the Firm." Sloan School of Management Working Paper, No.
The market risk premium is equal to the slope of the security market line (SML), a graphical representation of the capital asset pricing model (CAPM). CAPM measures the required rate of return on ...