The capital asset pricing model (CAPM) is normally used to determine the rate of asset return if securities are invested in a group of already determined market portfolios (OECD – Organisation for Economic Co-operation and Development 2004, p. 189). This model often considers the fact that there is always the occurrence of a non-divestible risk and a theoretical risk-free asset which has different implications when its return is to be comprehensively estimated (Contingency Analysis 1996). Generally, the capital asset pricing model is widely used to describe the relationship between risks and their expected levels of return, considering the fact that the investments to be made have a financial risk attributed to them (Mergner 2010, p. 124). However, the main idea behind the capital asset pricing model is that investors need to obtain returns based on two investment criteria: money and risk. Contingency Analysis (1996) explains this idea by stating that: “The time value of money is represented by the risk-free (rf) rate in the formula and compensates the investors for placing money in any investment over a period of time. The other half of the formula represents risk and calculates the amount of compensation the investor needs for taking on additional risk” (p. 3). Normally, to get the best outcome from the model (factoring in the above argument), we calculate a risk measure ( beta ), which will factor in the estimated returns that the market will offer for the investment, viz a viz the market premium (Frangos 2010, p. 488). Investopedia ULC (2011) explains that: “The CAPM says that the expected return of a security or a portfolio equals the rate on a risk-free security plus a risk premium. If this expected return does not meet or beat the required return, then the investment should not be undertaken” (p. 3). The CAPM model traces its roots to the sixties when it was introduced by William Sharpe and his colleagues (French 2003). The concept was developed from previous works done on Harry Markowitz’s study concerning diversification and modern portfolio theory, which ultimately won a Nobel memorial prize in economics for its contribution to the noble field of financial economics (Banerjee 1990). The main motivation for the pioneers of the model was to develop a formula which could predict the reward-to-risk-ratio based on the market potential of where a risk is to be invested. This means that if the rate of return for a particular asset is reduced because of one or more coefficients attributed to an asset, the reward-to-risk ratio potential existing in the market can be equated to the return that the market poses as a result. Consequently, this means that the market reward-to-risk ratio can be equated to the market risk premium and if the above analysis is rearranged to develop an appropriate relationship between market risk and returns of a particular investment, we ultimately come up with the capital asset pricing model (French 2003, p.1). This study will further explore the intrigues of the CAPM model with a special emphasis on its assumptions, criticism and comparative models that explain the same content. Comprehensively, we will then be able to establish if the concept of the model that enco