3M Company MMMFind the current market price of the stock at

3M Company (MMM)Find the current market price of the stock at the end of the day Friday, June 29, 2018 from financial news and data outlets such as Yahoo Finance, Google Finance, Forbes, Bloomberg, etc.

The U.S. Treasury 10 year bond yield must be used as the risk free rate of return. This can be found from U.S. Federal Reserve website.

The S&P 500 return from January 1, 2017 to December 31, 2017 must be used as market return.

Find the company’s beta from financial news and data outlets such as Yahoo Finance, Google Finance, Forbes, Bloomberg, etc.

Use the risk premium calculated for company from the capital asset pricing model calculation. Keep in mind that you do not need to add risk free rate for this calculation.

Solution

current market price of the stock at the end of the day Friday-$196.72

U.S. Treasury 10 year bond yield-2.83%

S&P 500 return from January 1, 2017 to December 31, 2017-18.593%

company’s beta from financial news-1.08

Risk Premium= Market return- risk free rate

=18.593%- 2.83%

=15.763

CAPM says risk Free +Beta* risk premium ( As mentioned in qustion not to add risk free rate)

So, +1.08*15.763=17.024%