New answers tagged expected-return
Each of these can be used, but each has serious drawbacks. No. 1 is inaccurate unless you use $N>>10$ years of data. But decades of data may not be available or may no longer be relevant to today's economy. No. 2 is good except that the CAPM has been rejected by empirical tests. More advanced models from Asset Pricing Theory may be helpful (FF3, FF5, ...
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