The Capital Asset Pricing Model (CAPM) is a financial tool used by firms like Orb Trust to evaluate the expected return of an asset relative to its risk. Orb's reliance on CAPM suggests a passive management approach, aligning investments with market indexes instead of frequent trading.
The Capital Asset Pricing Model (CAPM) is a financial model used by investment management firms such as Orb Trust to determine the expected return on an asset while considering risk. The CAPM formula is represented as Expected Return = Risk-Free Rate + Beta * (Market Return - Risk-Free Rate), where Beta represents the volatility or systemic risk of a security compared to the market as a whole. Firms like Orb relying on CAPM for their investment strategies typically engage in passive management, which involves tracking a market index and not actively buying and selling individual securities to beat the market.