The cost of capital for the firm's equity is usually estimated using the capital asset pricing model.
Excess returns are defined as raw returns minus the returns predicted by an asset pricing model such as the market model or the CAPM;
He feels that the extensive reliance on the normal distribution for much of the body of modern finance and investment theory is a serious flaw of any related models (including the Black–Scholes model and CAPM).
However, stock A’s upside beta is larger than the upside beta of stock B. Stock A’s CAPM beta will be larger than that of stock B, and thus stock A might be viewed by some investors as being more risky.
This possibility is studied in the field of behavioral finance, which uses psychological assumptions to provide alternatives to the CAPM such as the overconfidence-based asset pricing model of Kent Daniel, David Hirshleifer, and Avanidhar Subrahmanyam (2001).
In recent years, Fama has become controversial again, for a series of papers, co-written with Kenneth French, that cast doubt on the validity of the Capital Asset Pricing Model (CAPM), which posits that a stock's beta alone should explain its average return.
Alternative models for the normal returns include the CAPM model, or more simplistic approaches such as mean returns (see MacKinlay 1997 for an overview).
Boston University in the United States and through its Brussels campus in Belgium offers a Post-Graduate Certificate in Project Management that is recognized by the Project Management Institute and can be credited towards the CAPM credential as well as a Master of Science in Management degree.