CAPM is that ‘Capital Asset Pricing Model’. CAPM is nothing but the exam. CAPM is the model that describes the relationship . between the risk and the expected return and that is also used in the pricing of the risky securities. The general idea about . the CAPM was investors need to be compensate in to two ways: time value of the money and the risk. This means that the more 

risk you can take and the higher your potential return should be to offset your increased chance for the loss. Like all financial models the Capital Asset Pricing Model depends on the certain acceptance. Originally, there were total  nine assumptions, although more focus on the recent work in the financial theory has relaxed these rules. The original assumptions were:

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