The CAPM formula is expressed as: \[ \text{Expected Return} = R_f + \beta (R_m - R_f) \] - \( R_f \): The risk-free rate, typically the return on government bonds. - \( \beta \): A measure of the investment's risk relative to the market. - \( R_m \): The expected return of the market.
This formula helps to estimate the return on an asset while considering both the time value of money and the risk associated with the particular investment.