What does CAPM stand for in investment management?

The correct term is the Capital Asset Pricing Model, commonly referred to as CAPM. This model is fundamental in finance as it describes the relationship between systematic risk and expected return for assets, particularly stocks. The CAPM formula provides a means to determine an appropriate required rate of return for an investment given its risk relative to the market as a whole.

This model operates under the assumption that investors require higher returns for taking on higher risk. It utilizes the risk-free rate, the expected return of the market, and the beta of the investment (which measures its volatility in relation to the market) to calculate the expected return. Therefore, CAPM is valuable for portfolio management as it aids in the pricing of risky securities and helps investors make informed decisions about which assets to include in their portfolios to achieve their desired risk-return profile.

The other options mentioned do not accurately describe this widely-studied model in the context of investment management, making the Capital Asset Pricing Model the definitive and relevant choice.