A webcast on how to estimate the risk free rate in any currency. a) 10 year risk free EUR rate = 10 year bunds = 1.89% b) Inflation: Currently =3.4% I would the use the higher of the two rates, 3.4 %. This would be a pragmatic way to avoid unnecessary country risk premium and still make sure, the risk free rate does not imply a guaranteed loss in real terms.

A webcast on how to estimate the risk free rate in any currency. a) 10 year risk free EUR rate = 10 year bunds = 1.89% b) Inflation: Currently =3.4% I would the use the higher of the two rates, 3.4 %. This would be a pragmatic way to avoid unnecessary country risk premium and still make sure, the risk free rate does not imply a guaranteed loss in real terms. These risk premiums are estimated based upon a simple 2-stage Augmented Dividend discount model and reflect the risk premium which would justify they current level of the index, given the dividend yield, expected growth in earnings and the level of the long term bond rate. Risk Premiums for Other Markets. WACC Expert - Calculate your WACC in a few clicks : choose your country, your sector, adjust the parameters, get an excel file and order a report ! My name is Aswath Damodaran and I teach corporate finance and valuation at the Stern School of Business at New York University. I am a teacher first, who also happens to love untangling the puzzles of corporate finance and valuation, and writing about my experiences. Thus, if the expected inflation rate in a country is expected to be 15% and the TIPs rate is 1%, the risk free rate is 16%. 2. US $ Rate & Differential Inflation: Alternatively, you can scale up the US $ risk free rate by the differential inflation between the US $ and the currency in question:

A six-month treasury bill rate, while default free, will not be risk free, because there is the reinvestment risk of not knowing what the treasury bill rate will be in six months. Even a 5-year treasury bond is not risk free, since the coupons on the bond will be reinvested at rates that cannot be predicted today.

In the short term especially, the equity country risk premium is likely to be greater than the country's default spread. You can estimate an adjusted country risk premium by multiplying the default spread by the relative equity market volatility for that market A lot of discussions on implied cost of capital centers around the long-term growth rate. Naively applied, it can have a huge impact on implied cost of capital estimates. For example, if the current market value is MV 0 =100 and dividend forecasts are D 1 =4, D 2 =4, D 3 =4 then a growth rate of 0% results in an implied cost of capital of 4%, if the growth rate assumption is 5%, the implied cost of capital is 8.6%. Risk free Rates in January 2017 Aswath Damodaran 99-5.00% 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% n una una ev c o e $ ee a t d aht g eu l $ n e $ Yuan o $ $ y $ t $ o a e o l h e o d r i a g a Risk free Rates -January 2017 Risk free Rate Default Spread based on rating So the risk free rate for Indonesia is 8.5% subtract by 2.2% is 6.3%. Or, if using S&P rating, it is 6%. UPDATED #11-10-2014# Now, how about this question “Time deposit rate is at least 7.00% and deposits is guaranteed by LPS (Indonesia’s Deposit Guarantor Institution), so it must be risk free rate, right? A six-month treasury bill rate, while default free, will not be risk free, because there is the reinvestment risk of not knowing what the treasury bill rate will be in six months. Even a 5-year treasury bond is not risk free, since the coupons on the bond will be reinvested at rates that cannot be predicted today.

Country, GDP (in billions) in 2018, Moody's rating, Adj. Default Spread, Equity Risk Premium, Country Risk Premium, Corporate Tax Rate. Abu Dhabi, 253.00 

1 Jul 2014 The Definition of Risk-Free Asset Most capital market practitioners in Indonesia has been using the Indonesian Government Bond as the  government bond is considered a risk free rate of return, but the bond should be free Indonesia. Baa3. 2.00%. Malaysia. A3. 1.15%. Peru. Baa3. 2.00%. Poland Damodaran A., Investment valuation: tools and techniques for determining the   For the Euro zone, I use a country risk premium and the German bund rate as a risk free rate in Euros. 10. Indonesia. We export mainly to United States, Europe,   17 Jul 2019 Equity Risk Premium Puzzle: Evidence from Indonesia and Sri Lanka We calculate the daily risk-free rates by converting the annual treasury bill rates. market and rt is the daily adjusted annual treasury bill rate as a proxy for the risk- free rate. [Web of Science ®], [Google Scholar]; Damodaran, Aswath. 4 Apr 2018 Market Risk Premium (MRP), Risk Free Rate (RF) and Km [RF + MRP] used in 2018 in 59 countries. 2. Distribution Indonesia. 39 I use the US Equity premium of Damodaran to avoid explanations or justifications to clients.

Thus, if the expected inflation rate in a country is expected to be 15% and the TIPs rate is 1%, the risk free rate is 16%. 2. US $ Rate & Differential Inflation: Alternatively, you can scale up the US $ risk free rate by the differential inflation between the US $ and the currency in question:

Aswath Damodaran said So surely the "risk-free" rate is not just free of cashflow, default and reinvestment risk but also inflation risk. If governments print money to pay interest on their bonds then they fulfill the contract (which is in nominal terms) but the investor's real return is reduced by inflation. We started this session with a discussion of risk free rates, exploring why risk free rates vary across currencies and what to do about really low or negative risk free rates. The blog post below A webcast on how to estimate the risk free rate in any currency. a) 10 year risk free EUR rate = 10 year bunds = 1.89% b) Inflation: Currently =3.4% I would the use the higher of the two rates, 3.4 %. This would be a pragmatic way to avoid unnecessary country risk premium and still make sure, the risk free rate does not imply a guaranteed loss in real terms. These risk premiums are estimated based upon a simple 2-stage Augmented Dividend discount model and reflect the risk premium which would justify they current level of the index, given the dividend yield, expected growth in earnings and the level of the long term bond rate. Risk Premiums for Other Markets. WACC Expert - Calculate your WACC in a few clicks : choose your country, your sector, adjust the parameters, get an excel file and order a report ! My name is Aswath Damodaran and I teach corporate finance and valuation at the Stern School of Business at New York University. I am a teacher first, who also happens to love untangling the puzzles of corporate finance and valuation, and writing about my experiences.

We started this session with a discussion of risk free rates, exploring why risk free rates vary across currencies and what to do about really low or negative risk free rates. The blog post below

A six-month treasury bill rate, while default free, will not be risk free, because there is the reinvestment risk of not knowing what the treasury bill rate will be in six months. Even a 5-year treasury bond is not risk free, since the coupons on the bond will be reinvested at rates that cannot be predicted today. Riskfree Rates and Default Spreads! Aswath Damodaran! 2! Aswath Damodaran! 3! Aswath Damodaran! 4! Bond Market Volatility! Aswath Damodaran! 10! Country Risk Premium for Peru! Indonesia! 9.13%! Japan! 5.75%! Korea! 6.28%! Macao! 6.05%! Mongolia! 11.00%! Pakistan! 14.00%! The Indonesia Government Bond 10Y is expected to trade at 7.37 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate it to trade at 7.56 in 12 months time. Sumber data yang digunakan dan cara pengolahan data untuk variabel yang digunakan dalam perhitungan CAPM, yaitu Rf (risk free rate), β (beta), dan Rm (return market). Sebetulnya, ada banyak faktor yang harus dipertimbangkan ketika kita memilih input dari 3 variabel diatas, tapi untuk sampai ke sana perlu penjelasan yang tidak sedikit. WACC Expert - Calculate your WACC in a few clicks : choose your country, your sector, adjust the parameters, get an excel file and order a report ! My name is Aswath Damodaran and I teach corporate finance and valuation at the Stern School of Business at New York University. I describe myself as a teacher first, who also happens to love untangling the puzzles of corporate finance and valuation, and writing about my experiences. The)risk)free)rate)when)there)is)adefault free)enKty)(perhaps)) Aswath Damodaran! 3! Risk free rates on 2/20/13! Australian $: 3.55%! Canadian $: 2.02%! Danish Krona: 1.81%! Euro: 1.65%! Yen: 0.75%! NZ $: 3.92%! Swedish Krone: 2.02%! Swiss Franc: 0.77%! British £: 2.18%! US $: 2.01%! Financial Times! Benchmark Government Bonds! Published every day!

Risk free Rates in January 2017 Aswath Damodaran 99-5.00% 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% n una una ev c o e $ ee a t d aht g eu l $ n e $ Yuan o $ $ y $ t $ o a e o l h e o d r i a g a Risk free Rates -January 2017 Risk free Rate Default Spread based on rating So the risk free rate for Indonesia is 8.5% subtract by 2.2% is 6.3%. Or, if using S&P rating, it is 6%. UPDATED #11-10-2014# Now, how about this question “Time deposit rate is at least 7.00% and deposits is guaranteed by LPS (Indonesia’s Deposit Guarantor Institution), so it must be risk free rate, right? A six-month treasury bill rate, while default free, will not be risk free, because there is the reinvestment risk of not knowing what the treasury bill rate will be in six months. Even a 5-year treasury bond is not risk free, since the coupons on the bond will be reinvested at rates that cannot be predicted today. Riskfree Rates and Default Spreads! Aswath Damodaran! 2! Aswath Damodaran! 3! Aswath Damodaran! 4! Bond Market Volatility! Aswath Damodaran! 10! Country Risk Premium for Peru! Indonesia! 9.13%! Japan! 5.75%! Korea! 6.28%! Macao! 6.05%! Mongolia! 11.00%! Pakistan! 14.00%!