Question
The Capital Asset Pricing Model (CAPM) uses the 'risk free rate' as a stand alone in its formula. So, how might you go about selecting
The Capital Asset Pricing Model (CAPM) uses the 'risk free rate' as a "stand alone" in its formula.
So, how might you go about selecting a 'risk free rate'...what criteria might you consider. In addition, how might you determine which 'market rate' to use in the formula...what considerations might you ponder in/with its selection?
Lastly, select any firm (perhaps the firm where you work, or select any firm that is publically traded (on a major U.S. exchange) and show us the components you've used to calculate (and, then calculate the results...the CAPM rate) a required return for the firm.
The components to be used are:
Risk Free Rate
Market Rate
Beta
I need an example on how to do this. I was wondering if this can be done with a non-profit? Because I work at a non-profit that helps people with mental health and addiction issues. How could I apply this method to that?We rely solely on donations from places like the United Way. Can I have an example with calculations please? Thank you
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