Asked on 26 Dec 2019
Anyone with experience using this CAPM Formula willing to share their experience and help?
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
For valuation taught in school, it would usually be the 10-year bond as the risk free rate. That's how typical investors would value share prices.
Personally, i feel there's no hard and fast rule, I would used CPF OA 2.5% myself. Some also used the historical inflation rate...