Learn how to calculate the cost of equity in Microsoft Excel using the capital asset pricing model, or CAPM, including brief definitions of each component.

One simple but powerful method investors can use to assess the risk and reward of a stock portfolio is using the Capital Asset Pricing Model, or CAPM, model for expected returns.

Launch Excel and create a new, blank spreadsheet. Type "Securities" in cell A1, "Rate of Return" in B1, "Beta" in C1 and "CAPM" in cell D1. Type "Risk-free" in cell A2, "Market" in A3 and "Stock ...