Problem:
National Australia Bank (NAB) is a prominent company listed on the Australian Stock Exchange.
Using the one-factor CAPM, work out the expected rate of return for the company for the seven-month period beginning Monday 27 may 2007 through to 31 Dec 2007. Explain how you arrived at the values for the variables in the model. For example, how you determined the risk premium and the period you used to estimate data.
The current Australian 3-yrs government bond rate (risk free rate) is 5.93%.