Capital Asset Pricing Model or CAPM is the theory of estimating the cost of equity or the required rate of return on any investment. Here, the cost of equity comprises of risk-free rate of return plus market risk premium multiplied by beta coefficient. CAPM tells about the relationship between systematic or non-diversifiable risk and the expected rate of return for equities. CAPM is very widely used throughout financial markets worldwide for pricing risky securities and generating the expected rate of returns for equities given the risk level and cost of capital.