Capital Asset Pricing Model ( CAPM ).

Ra = Rf + βa ( Rmkt – Rf)

Expected return of an asset Ra = RiskFreeRate + βAsset * ( returnMkt- RiskFreeRate)


Rf​=risk-free rate

βi​=beta of the investment

(ERm​−Rf​)=market risk premium​

I read that β of real estate is 0.5 and accordingly, real estate should fluctuate 1/2 of the market fluctuation. It is somehow expected since real estate prices as well as rents do not change with the same rapidity as the stock market can change.

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