How do i determine the expected return of the market and the risk free rate for CAPM analysis?

Question

I am trying to do a CAPM analysis for Wells fargo... WFC... any help in how to do it is appreciated

Answer 1

For the risk free rate use the yield on the 10 year treasury note.

You could use the historical return on the market, which has been between 11-12 percent since 1928

Answer 2

Risk free rate could be the yield on a triple rated bond or US treasury which are considered risk free (i.e. 30 yr T Bond).

Answer 3

When I was in school we always used the 90 day t-bill as the risk free rate, but I guess that you could argue that the 10 year T-note is ok.  To see current rates I look at bloomberg.com

http://www.bloomberg.com/markets/rates/i...

Expected rate of return will depend on the stock, a riskier stock should have a higher expected rate of return to compensate for higher risk, you should be in the range of 7%-15% for most stocks.