How Do You Calculate Expected Market Return In CAPM Model For Finding Cost Of Equity?
If you are using this personally, then you can drop it. I have recently written a proof that the Expected Return cannot be estimated by any means, that it is a mathematical impossibility. The CAPM is tautologically true, but it can be shown that the limitations upon it make it useless for use in Finance. It will still hold great importance in economics because there are behavioral implications to it, but its value as a tool is nil. The reason and the mathematics are too complex for Yahoo Answers if for no other reason that you cannot put the symbols in the text. If this is for a class, then you should find a good proxy variable for the market of all risky assets, including real estate and foreign securities, and find its historical geometric return over inflation.
