Return Comparator
Analyze the risk-adjusted return of private loans vs traditional instruments using the CAPM model.
CAPM Parameters
Rate = Rf + β(Rm - Rf) + Illiquidity Premium + Credit Spread
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Resulting CAPM Rate
10.13%
Rate Construction (Waterfall)
Each CAPM model component adds up to build the required rate of return.
Risk-free rate (Rf)+4.23%
= 4.23%
Systematic risk (β × ERP)+2.40%
= 6.63%
Illiquidity premium+2.00%
= 8.63%
Credit spread+1.50%
= 10.13%
Total CAPM Rate10.13%
Risk-free rate (Rf)
Systematic risk (β × ERP)
Illiquidity premium
Credit spread
Return Comparison
| Instrument | Annual Return | Risk | Collateral | Liquidity |
|---|---|---|---|---|
| Bank CD | 3.48% | Low | FDIC insured | High |
| Treasury 10Y | 4.23% | Low | US Government | High |
| S&P 500 | 10.00% | High | None | High |
| Private Loan | 10.13% | Medium | Real estate (1st lien) | Low |
Comparative Returns
Bank CD3.48%
Treasury 10Y4.23%
S&P 50010.00%
Private Loan10.13%
CAPM Formula
Rate = Rf + β(Rm - Rf) + Illiquidity Premium + Credit Spread
4.23% + 0.4 × 6% + 2% + 1.5% = 10.13%
Data Sources
- Risk-Free Rate (Rf):U.S. Treasury 10-Year Constant Maturity Rate
- Equity Risk Premium:Prof. Aswath Damodaran, NYU Stern School of Business
- Bank CD:U.S. Treasury — CD 12-Month Yield / FDIC Weekly National Rates
- S&P 500:Average annualized historical return (1957–2025)
Data updated as of 03/2026. Values presented are for reference and may vary. This tool does not constitute financial advice.