Week $6$ Discussion $-$ CAPM at

PART $1$:

Step One: Go to Nasdaq,com $G$ and pick a stock that has a symbol that starts with the first letter of your first name AND one that pays a dividend and has paid a dividend for the last $3$ years $($at least$).$ Do not pick the same stock someone else has already used $($check the prior posts$)$

Step Two: Calculate the expected return on this stock based on the CAP$-$M equation. SHOW YOUR WORK

To calculate the expected return, remember that the CAP$-$M equation is as follows:

$E{R}_{\text{s}\text{t}\text{o}\text{c}\text{k}}=R_f+R{P}_m({}_{\text{s}\text{t}\text{o}\text{c}\text{k}})$

Where

$R{P}_m=R{R}_{\text{m}\text{a}\text{r}\text{k}\text{e}\text{t}}-R_f$

$R_f=$ The Risk Free rate. Use the current interest rate for $10-$year T$-$Bills.

${}_{\text{s}\text{t}\text{o}\text{c}\text{k}}=$ The beta of the stock. This is listed on the Nasdaa page.

$R{R}_{\text{m}\text{a}\text{r}\text{k}\text{e}\text{t}}=$ The market return. Find out what the average return has been in an appropriate market and use the average return over the past five years for the index fo that market $($for example, if it is a large US stock, you could use the five year rate for the S & P$500).$

Step Three: Post your answer from Step Two along with the actual average return of your stock over the past five years.