Capital Asset Pricing Model (CAPM)

The Capital Asset Pricing Model (CAPM) is a measurement based on the idea that an investor will demand a higher return for taking on greater risk. To use the CAPM to value a company’s intangible assets, the first step is to determine the company’s beta coefficient. This can be done by looking at similar companies or by using historical data for the company. For example, a technology company that relies heavily on patents for its revenue may have a higher beta coefficient than a retail company that does not rely on intangible assets. By using the CAPM and other valuation methods, investors and analysts can gain a better understanding of a company’s intangible assets and make informed decisions about investing in the company.