Business Homework Solutions
#5982
Nordstrom: Calculate the market risk premium after finding the market rate.
Calculate the cost of equity for a particular firm (Nordstrom JWN) using the CAPM. Their Beta is 1.25 and this is appropriate to use as the 10-year treasury bond rate which I found to be 3.68% as the risk free rate. However, to calculate the market risk premium, I need to ascertain the market rate. Where can I find this?
The solution explains about the market rate and why it is difficult to find and use consistently.
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Mutasem Sinnokrot, PhD - 4.9/5
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