The discounted cash flow model may be the best known, but the capital asset pricing model, also known as the CAPM, is another one of the more foundational financial models taught in business school.

The cost of equity formula is a financial metric that represents the return investors expect for holding a company's stock.

The higher it is over 1 is how much better a risk-adjusted rate of return it has. Capital Asset Pricing Model (CAPM) The Capital Asset Pricing Model (CAPM) is a mathematical model that seeks to ...