The longer the period, the higher the risk, of course. We said that the rate that we use to discount future cash flows is the prevailing interest rate and this is partly true in stable, predictable and certain economies. Beta is a measure of the volatility of the return of the stock relative to that of the return of the market. A stock's Beta can be obtained by calculating the coefficient of the regression line between the weekly returns of the stock and those of the stock market during a selected period of time. Another problem is that betas change with every new datum.
Professionals resort to sensitivity tests which neutralize the changes that betas undergo with time.
Still, with all its shortcomings and disputed assumptions, the CAPM should be used to determine the discount rate. But to use the discount rate we must have what to discount, future cash flows. The only relatively certain cash flows are the dividends paid to the shareholders. Still, DDM require, as input, the ultimate value of the stock and growth models are only suitable for mature firms with a stable and not too high dividend growth. As the firm matures, it is expected to have a lower and stable growth rate, suitable for the treatment of Growth Models.