Capital Asset Pricing Model (CAPM)

The Capital Asset Pricing Model (CAPM) is a financial model that establishes a relationship between the expected return of an investment and its systematic risk, as measured by beta. It is utilized in product design and innovation to assess the risk-adjusted return on investment, guiding decisions on resource allocation and project viability. By incorporating CAPM into research and production strategies, organizations can optimize their investment portfolios and enhance overall financial performance.