What is a reasonable market return estimate for Pfizer Inc.?
What would a reasonable market return (estimate) be for Pfizer Inc. be or any other comparable company? By comparable I mean a large cap, low beta, economically stable pharmaceutical firm (such as Merck & Co. etc.
But more importantly, how did you arrive at this figure? I'm doing a project in where I have to come up with a required rate of return for a certain company I'm investing in, but, I'm having a tough time figuring out where to begin when determining a reasonable market return (which is included in my equity risk premium) for my company (Pfizer).
Again, this is merely for a project, and I need advice on where to start when determining an appropriate figure for market return.
Help?
Your professor wants you to plug their Beta into the CAPM equation...
For market risk premium just come up with some justifiable average. I think going back to the 1920's/30's the average is like 8.5% or you may want to just calculate a 10 year average or whatever you think is best.
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