CAPM Expected Return

Inspectable records

Ledger state

The current ledger marks this instrument verified clean within the source-bound verification corpus.

Area

Finance, Economics & Business (educational only — never individualized investment, tax, or legal advice)

Tranche

tranche-4

Evidence ID

t4-188

Ledger rows

1

No ledger note is attached.

Review findings

The formula E(R)=Rf+β(Rm−Rf) is the standard single-factor CAPM expected-return formula. The specification is otherwise correct, but it is ambiguous whether rate inputs are decimal fractions or percentage points, so the panel needs an explicit unit convention and conversion/display rule. The honest educational-model label is appropriate; CAPM output is a model-implied expected return, not a guaranteed forecast.

Formula and scope findings

No additional record

Unit assumptions

• Rf and Rm must be expressed in the same units, either decimal fractions or percentage points; beta is dimensionless.
• The numeric input format is unspecified: for example, 0.05 can mean 5% as a decimal fraction, while 5 can mean 5 percentage points.
• Expected return is reported as a percentage; decimal-fraction results must be multiplied by 100 for display.

Boundary hardening

BREAK_CLAIMED · SELF_FLAGGED

An extreme but syntactically numeric input produces a non-finite +Infinity result through floating-point overflow. A robust instrument should reject non-finite inputs or flag the non-finite output rather than display it as an expected return.

Errata and corrections

No applied erratum is attached to this unique-name record.

Inspectable example

4 review vectors are recorded. One source-bound sample is shown below.

{
  "inputs": {
    "risk_free_rate": 0.04,
    "beta": 1.2,
    "market_return": 0.1,
    "rate_unit": "decimal fraction"
  },
  "expected_outputs": {
    "expected_return_percent": 11.2
  },
  "working": "E(R) = 0.04 + 1.2 × (0.10 − 0.04) = 0.04 + 1.2 × 0.06 = 0.04 + 0.072 = 0.112 = 11.2%."
}

Related workflows

Sources and evidence

These pointers bind the page to evidence. They do not grant authority or collapse verification into deployment.

• VERIFIED_LEDGER.json · VERIFIED_CLEAN
• evidence-tranche4/tranche4-results.json
• BOUNDARY_HAZARD_CATALOG.json