facebookHi, for the risk-free rate in the CAPM formula. Should i use the market yield or the coupon rate of the 10 -year bond as the risk free rate ? - Seedly
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Hi, for the risk-free rate in the CAPM formula. Should i use the market yield or the coupon rate of the 10 -year bond as the risk free rate ?

Anyone with experience using this CAPM Formula willing to share their experience and help?

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    What are your thoughts?

    Textbook answer would be 10 years bond coupon rates.

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      From our finance classes, the answer is to take the coupon rate of the 10 year bond. This is because of the idea we should be adopting something that is close to risk free. The market yield is not a good "close to risk free" instrument

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        Billy Ko

        Billy Ko

        13 Jan 2020

        Level 11ยทFinancial Analyst at REPE Firm

        For valuation taught in school, it would usually be the 10-year bond as the risk free rate. That's h...

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