Using the CAPM, what is the required rate of return for MSFT?
Return on the market portfolio (SPY) and the risk free rate Rf is given below:
Use Yahoo. Finance MSFT beta estimate: b = 1.044; assume RSPY = 10% (based on 40+ years of historical data); and a risk-free rate of Rf = 4.0% (i.e., based on L-T inflation rate of 3.0% and real return of 1.0%).