What is CAPM?
By Haresh Ratnagrahi, Founder, HiPrep (CPA, FCA, CMA (US), CISA, CRISC)
Definition
The capital asset pricing model estimates the required return on equity as the risk-free rate plus beta multiplied by the market risk premium.
Where CAPM matters
CMA (US): The credential for management accounting and finance leadership. 2 Exam parts; 4 hrs Per part: 100 MCQs + 2 essays; 360 Passing score (0–500 scale); 3 yrs To complete both parts from your first. Parts: Part 1 Financial Planning, Performance and Analytics; Part 2 Strategic Financial Management.
Related terms explained
WACC: The weighted average cost of capital: the blended cost of a company’s debt and equity, weighted by their proportions, with debt adjusted for the tax shield.
CMA Part 2: Strategic Financial Management: financial statement analysis, corporate finance, decision analysis, risk, investment decisions and ethics.
How HiPrep teaches it
In HiPrep, CAPM is taught concept-first and then practised in a Prometric-style simulator. Every answer is built step by step so you see how a result is reached, explanations are available in English, Hindi, Tamil, Telugu and Kannada, and a mentor is behind the platform for doubts. Start with the free diagnostic to see where CAPM sits in your plan.