In valuations the risk-free rate is usually taken from long-term government bond yields in the valuation currency; consistent use of currency matters in lira and foreign currency valuations. A country risk premium may be added separately.
Related terms
Capital asset pricing model (CAPM)A model that calculates the cost of equity from the risk-free rate, beta and the market risk premium.Cost of capitalThe minimum rate of return investors expect from an investment in return for the risk they take.Weighted average cost of capital (WACC)The average of the costs of a company's equity and debt financing, weighted by their share of the capital structure.BetaA coefficient measuring the sensitivity of a share's return to changes in the market return, that is, its systematic risk.Break-even pointThe sales volume or amount at which total revenue equals total cost and the business makes neither profit nor loss.Completion accountsFinancial statements prepared as at the closing date of an acquisition, through which the final price is set by net debt and working capital adjustments.
Last updated: October 31, 2026 · This definition is for general information only.