CALCULATING CAPM AND WACC FOR A REAL FIRM
Our discussion topic concerns the calculation of stock values using the capital asset pricing model (CAPM). Explain the CAPM model. The textbook provides a list of betas for a selection of stocks. Choose two firms from that list and discuss whether the betas are what you would expect. Be sure to explain why or why not. Calculate the returns based on the CAPM model. Be sure to state your assumptions.
I would appreciating seeing every student’s calculations submitted to this thread.
Personally, I would use the spread of (Rm-Rfr) about 5-6 points, no more, for your CAPM.