Abstract
As one of major theories in the financing management, the Capital Asset Pricing Model (CAPM) has great significance in many fields, such as the quantity analysis of risk and expected return in real estate investment, and the determination of the balanced price in the market. Based on the analysis of the parameters in the CAPM and its principles, this paper discusses the relationship between the risks and returns in property and stock investments in Beijing, using the data covering 1991 to 1999. It is found that property investment has many advantages. Returns from direct property investment have a low correlation with those of stocks, and some of the unsystematic risk of property investment is rewarded by the market. This paper suggests that direct property investment should be included in a mixed-asset portfolio to reduce risk and to stabilise return.
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