Return Comparator
Analyze the risk-adjusted return of private loans vs traditional instruments using the CAPM model.
This calculator compares the risk-adjusted return of private loans against traditional instruments using the CAPM (Capital Asset Pricing Model).
It's ideal for investors who want to understand whether a private loan's return justifies the risk compared to CDs and Treasuries.
Enter the risk-free rate, beta, equity risk premium, and private lending-specific premiums.
For example, if the risk-free rate is 4.23% and CAPM suggests a fair return of 9.5%, a 10% loan offers a positive spread over the assumed risk.
CAPM Parameters
Rate = Rf + β(Rm - Rf) + Illiquidity Premium + Credit Spread
Resulting CAPM Rate
9.16%
Rate Construction (Waterfall)
Each CAPM model component adds up to build the required rate of return.
Return Comparison
| Instrument | Annual Return | Risk | Collateral | Liquidity |
|---|---|---|---|---|
| Bank CD | 1.52% | Low | FDIC insured | High |
| Treasury 10Y | 4.26% | Low | US Government | High |
| Private Loan | 9.16% | Medium | Real estate (1st lien) | Low |
Comparative Returns
CAPM Formula
Rate = Rf + β(Rm - Rf) + Illiquidity Premium + Credit Spread
4.26% + 0.4 × 6% + 1.5% + 1% = 9.16%
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
Data updated as of 03/2026. Values presented are for reference and may vary. This tool does not constitute financial advice.