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Risk from perspective of the Capital Asset Pricing Model

Discuss risk through the perspective of the Capital Asset Pricing Model (CAPM).
The Capital Asset Pricing Model, or CAPM, can be utilized to compute the appropriate required rate of return for an investment project specified its degree of risk as measured by beta (β). A project's beta reveals its degree of risk relative to the total stock market. In the CAPM, while the beta term is multiplied by the market risk premium term, the result is the additional return onto the risk-free rate that investors demand from that individual project. High-risk (high-beta) projects have high required rates of return, and low-risk (low-beta) projects have low required rates of return.

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