# CAPM

## Description

The capital asset pricing model (CAPM) is an asset valuation model describing the relationship between assets (or portfolios) and market prices. CAPM posits that the intercept of a regression equation between an instrument's returns and the returns of systematic factors is zero in an efficient market. This is a widely used classic model for asset pricing.

## Syntax

The following describes the function signature for use in Microsoft Excel's formula bar.

```excel-formula
=CAPM(marketReturns, assetReturns, rf, rm, dataPeriodicity)
```

### Input(s)

| Argument            | Description                                                                                                                                                                                    |
| ------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| **marketReturns**   | Required. Time series of market portfolio returns.                                                                                                                                             |
| **assetReturns**    | Required. Time series or matrix of asset (or portfolio) returns.                                                                                                                               |
| **rf**              | Optional. Risk-free rate. If you do not enter the argument, it defaults to zero.                                                                                                               |
| **rm**              | Optional. Expected market return. If you do not enter the argument it, defaults to the annualized historical average of the **marketReturns** time series.                                     |
| **dataPeriodicity** | <p>Optional. Periodicity of the data, used for annualization. If you do not enter the argument, it defaults to 1. <br><em>e.g. Daily = 255, Monthly = 12,  Yearly = 1, Quarterly = 4.</em></p> |

### Output(s)

Row vector of CAPM expected return estimates.

## Example

![](https://258561627-files.gitbook.io/~/files/v0/b/gitbook-legacy-files/o/assets%2F-MK66-MGuoULhqCDXLwy%2F-MKuIS1nbFw1KMGIwGz2%2F-MKuIhKqT302WpCyqbYy%2Fimage.png?alt=media\&token=69d93296-58df-4216-8e06-e65705d936bc)

{% file src="<https://258561627-files.gitbook.io/~/files/v0/b/gitbook-legacy-files/o/assets%2F-MK66-MGuoULhqCDXLwy%2F-MQVAWpeWO6mxF13cK9n%2F-MKuFBvILcLpShxM7FbS%2FCAPM.xlsx?alt=media&token=0d430585-5c27-4ae6-91fc-3743ddcd0e3a>" %}
Example Workbook: CAPM
{% endfile %}


---

# Agent Instructions: Querying This Documentation

If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question.

Perform an HTTP GET request on the current page URL with the `ask` query parameter:

```
GET https://excelhelp.windhamlabs.com/functions/return-models/capm.md?ask=<question>
```

The question should be specific, self-contained, and written in natural language.
The response will contain a direct answer to the question and relevant excerpts and sources from the documentation.

Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.