Groundlearn / Glossary / Required rate of return
Required rate of return
A CFA term, defined in plain English with the distinction examiners test.
What it means
The minimum return an investor demands for holding an asset, given its risk.
Where it appears in the syllabus
- EquitiesCFA Level I · exam weight 11–14% · Market organisation, indexes, industry analysis, dividend models.
- Portfolio ConstructionCFA Level I · exam weight 8–12% · Risk and return, the CAPM, IPS construction, behavioural biases.
Related terms
- BetaThe sensitivity of an asset’s return to the market’s return — its share of systematic risk.
- Capital asset pricing modelA model stating that an asset’s expected return equals the risk-free rate plus beta times the equity risk premium.
- Market efficiencyThe proposition that prices already reflect available information, so consistently beating the market on that…
- Market-capitalisation-weighted indexAn index in which weights are proportional to constituents’ market values.
- Book valueThe accounting value of equity: assets less liabilities as reported.
- Common shareAn ownership claim on a company’s residual cash flows and assets, normally carrying a vote and ranking last in…
Educational content only. This is not financial, investment, legal or regulatory advice. Check the official curriculum for your own exam before relying on any definition here.
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