In applying the CAPM (Capital Asset Pricing Model) to estimate the cost of equity capital, which of the following elements is not subject to dispute or controversy?
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A. B. C. D. E.B
Under the CAPM approach, it is difficult at best, to obtain correct estimates of the inputs required to make it operational:
1. there is controversy about whether to use long-term or short-term Treasury yields for the risk-free rate.
2. it is difficult to estimate the beta that investors expect to firm to have in the future, and it is difficult to estimate the market risk premium.