CAPM Model and Calculating the Inflation Rate?




Capital Asset Pricing Model
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Sadek
Student (MBA), Egypt

CAPM Model and Calculating the Inflation Rate?

Can CAPM help us in calculating the inflation rate and in taking the investment decision? Need an ilustration on the this subject.
 
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Anonymous
 

Is CAPM Inflation Adjusted?

The CAPM formula is: Expected return = Risk free return + (beta * market risk premium)
Notice that inflation is not part of the formula so CAPM is normally not inflation adjusted. The expected return may be influenced by the current inflation rate, but I would not call it inflation adjusted.

   

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