[Series 65] 42, Capital Asset Pricing Model

[Series 65] 42, Capital Asset Pricing Model

From Open Exam Prep by Ran Chen, EA, CFP®

May 5, 2026 · 3 min

About this episode

This episode covers the Capital Asset Pricing Model and its components for calculating expected returns on securities.

This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams. In this episode you will learn: - How to calculate a security's expected return using the Capital Asset Pricing Model (CAPM) formula. - The roles of the risk-free rate, beta, and the market risk premium in the CAPM calculation. - Why the Security Market Line (SML) is the graphical representation of CAPM. - How to use the SML to determine if a security is undervalued, overvalued, or fairly valued. - To identify common distractor information, like standard deviation, in Series 65 CAPM questions. For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep

People in this episode

Host: Ran Chen

Topics covered

  • Capital Asset Pricing Model
  • expected return
  • risk-free rate
  • market risk premium
  • Security Market Line
  • valuation of securities

Keywords

  • CAPM
  • expected return
  • risk-free rate
  • beta
  • market risk premium
  • SML
  • Series 65
  • valuation

Mentioned in this episode

Organizations: Open Exam Prep

Products: Capital Asset Pricing Model, Security Market Line, Series 65

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