Hi all I would like to hear everyones thoughts calculating the market risk premium (Rm-Rf) for use in the CAPM in calculating the cost of equity component of the WACC. I am using the following: Rm - average 1 year rolling returns over the last 10 years of the ASX all ords Rf - average yield of 10yr au treasury bonds Rm is extremely low given the huge drop in the index from the GFC. This gives me a negative market risk premium and is giving me a headache. Any thoughts?
