Return required for a specific asset

Opening Friday February 20 Bajista Ibex 2009Cierre Wallstreet Thursday February 19 2009Apertura bassist of the ibex. At 11, raised over a loss and fell 2.75 to levels of 7653.40 points, losing the 7700 puntos.En and Asia, the Nikkei, Japanese stock market index, is at minimum 25 anos.Ayer Thursday February 19, the Dow Jones surpassed the minimum in 2008 and began 2002 levels. CAPM calculates the appropriate rate of return required to discount future cash flows to produce an asset, given the appreciation of risk is that asset. Betas greater than 1 meaning that the asset has a higher than average risk of the entire market betas below 1 indicate a lower risk. Therefore, an asset with a high beta should be discounted at a higher rate as a way to reward investors for assuming the risk that the assets involved. This is based on the principle that says that investors, the more risky the investment is called for returns.
Since beta reflects the sensitivity to non-diversifiable market risk, the market as a whole has a beta of 1. Since it is impossible to calculate the expected return of the overall market, usually are used indices such as SandP 500 or the Dow Jones.