Proxy for market return?
I'm calculating CAPM for a company listed on the NASDAQ, and I was wondering if anyone could suggest a proxy I could use for the market return (to arrive at the market risk premium)? I'm doing DCF for 2001-2009, and I've looked at historical index data (closing - opening / opening) and I get negative return over the past 9 years for the NASDAQ, so I can't use that. 2009 saw a large rebound from the end of 2008, so the return is huge (think 40%+) and thus I don't think it's a great proxy. 2005-2009 saw ~3.8% return - this is pretty much identical to the risk-free rate... Any suggestions?
Historical Market Risk Premium is 3.88% over a 10-yr. Treasury. So roughly 7.25% expected return on the market. Keep in mind that a firm's cost of capital changes over time so pinpointing an exact cost of equity down to the hundred is pointless unless you completely own the business outright. Just try to have reasonable assumptions.
Qui odio placeat voluptate rem corporis temporibus voluptatibus. Perferendis sapiente facilis in sint. Provident ducimus exercitationem temporibus facilis voluptatem voluptatibus debitis. Eos repellendus tempora qui dolores ratione.
Voluptatem quidem voluptates quam placeat neque similique soluta. Repudiandae doloribus deserunt fugit libero perspiciatis eveniet. Sed nihil quis reprehenderit voluptates ut. Iusto minus quaerat est earum ducimus.
Neque rerum rem sit a vel. Earum et esse consequatur aperiam. Consequatur beatae iure culpa quos voluptas.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...