CAPM

The Capital Asset Pricing Model (CAPM), developed independently by four researchers around 1964, is a finance model that describes the relationship between systematic risk and expected return on assets. It aligned with practitioners’ intuitions while providing a disciplinary framework for investment managers, though its validity remains debated since it cannot be definitively empirically tested.

Claims that use this term

• The CAPM emerged independently from four researchers in about 1964
• The CAPM aligned with practitioners’ intuitions yet could discipline investment managers
• The CAPM was embraced in Chicago but regarded skeptically at MIT
• The CAPM may be true but can never be empirically tested