CAPM says that the expected return of an asset or a portfolio is the rate on a risk-free security plus a risk premium. Practice calculating the expected return of an asset for your company.

Here is the recap of the model:

You can find the beta for your company (Kohl's Corporation) in Yahoo! Finance (look up your company and go to Key Statistics) or Google Finance. Or calculate your own..

For the risk-free rate, look up the Treasury bill interest rate (select what you think is the appropriate rate) and the risk premium (do some research; start with the most recent Ibbotson Associates report on market premium).

1) list your company, 2) company beta, 3) your risk-free rate, and 4) the risk premium rate. Explain your reasoning for selecting the values of your risk-free rate and the market premium. Is your calculated expected return value reasonable for your company?

1) Kohl's Corporation

rf E risk-free rate B beta m-rf risk premium