Capital Asset Pricing Model (CAPM) API
Capital Asset Pricing Model (CAPM) implementation.
capm(risk_free_rate, beta, market_return)
Calculate expected return using the Capital Asset Pricing Model (CAPM).
CAPM formula: E(R) = Rf + β × (Rm - Rf)
This implementation supports both scalar and vector inputs for batch calculations.
Parameters:
| Name | Type | Description | Default |
|---|---|---|---|
risk_free_rate
|
float or array - like
|
Risk-free rate of return (e.g., 0.03 for 3%) |
required |
beta
|
float or array - like
|
Beta of the asset(s) (measure of systematic risk) |
required |
market_return
|
float or array - like
|
Expected market return (e.g., 0.08 for 8%) |
required |
Returns:
| Type | Description |
|---|---|
dict or list of dict
|
Expected return and components for each asset |
Raises:
| Type | Description |
|---|---|
ValueError
|
If any of the input parameters are invalid |