Consumption Capital Asset Pricing Model

The Consumption Capital Asset Pricing Model (CCAPM) is a financial theory that explains how expected investment returns relate to future consumption. Unlike traditional models, which focus on risk and returns of assets, CCAPM considers how investors care about their future consumption levels. It suggests that assets offering higher expected returns come with higher risk concerning future consumption. Essentially, it links investment choices with personal consumption preferences, helping to understand how individuals value their investments based on their consumption needs and desires over time.