Question
CAPM says that the expected return of an asset or a portfolio is the rate on a risk-free security plus a risk premium. For this
CAPM says that the expected return of an asset or a portfolio is the rate on a risk-free security plus a risk premium. For this discussion, you will practice calculating the expected return of an asset for Kohl's Corporation.
Here is the recap of the model:
You can find the beta for your company in Yahoo! Finance (look up your company and go to Key Statistics) or Google Finance.
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?
rf E risk-free rate B beta m-rf risk premiumStep by Step Solution
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