Impact of the Current Environment on the Risk-Free Rate as an Input to the Capital Asset Pricing Model

Business Valuation Update
Business Valuation Australia
October 15, 2015
Fiona Hansen

Summary

The risk-free rate is the rate that compensates an investor for the time value of money and the expected inflation over an investment period. Valuers typically use Australian Commonwealth Government Securities as a proxy for risk-free rate when valuing assets with AUD-denominated cash flows.