1) capital asset pricing model Expected Rate of Return = Risk-Free Premium + Beta * (Market Risk Premium) Ra = Rrf + βa * (Rm – Rrf) Risk-free return:(Rrf) is the value assigned to an investment that guarantees a return with zero risks. Market Risk Premium (Rm – Rrf) is the expected return an investor receives (or expects to receive in the future) from holding a risk-laden portfolio instead of risk-free assets. Beta (βa) The Beta is a measure of the volatility of a stock with respect to the market in general. The fluctuations that will be caused in the stock due to a change in market conditions 2) The Capital Asset Pricing Model (CAPM) describes the relationship between systematic risk and expected return for assets, particularly stocks