Is Alpha from CAPM same as Excess return?

CFA Level II
#1

Is Alpha from CAPM(the intercept term) the same as the alpha from the Excess return equation Excess Return - Required return?

#2

I thought the intercept term for CAPM was Risk Free Rate.

#3

Woops yea i got confused for a second on a question that labeled RFR as alpha

#4

You are right, in the general regression form (like CAPM), the intercept is alpha. But that’s not same as alpha in an excess return sense.

#5

Mind explaining??? CAPM equation is: E(Ri) = RFR + beta*(E(Rm) - RFR) comparing it to Y = mx + c (standard equation of a line) Y = E(Ri) = Y-axis X = beta = X-axis c = RFR = intercept m = (E(Rm) - RFR) = slope

#6

swaption, you and I had discussed this last night. (Ri - RFR) = alpha + beta(Rmarket - RFR) if alpha is zero, then explanatory power comes from beta (although never 100% as proven by low correlations) if alpha = 0 then Ri - RFR = beta*mkt risk premium Ri = RFR + beta*mkt risk prem Compare this to market model, which just plots E® = alpha + beta*E(mkt)