Risk-Free Rate

Short definition

The risk-free rate is taken as the yield on a government bond that is treated as free of default and reinvestment risk. It is the floor of Ke and WACC; it is not the policy rate or the loan reference.

Detailed explanation

Currency must match the cash-flow currency. Tenor matches a bond near the DCF horizon (10Y is common, not mandatory). Inflation expectations sit inside nominal Rf; a real DCF uses a real Rf.

If Rf is a local yield, country risk is already inside it. Adding CRP again double-counts.

Why it matters for the CFO

A 2-point move in Rf shifts Ke and WACC the same way. The valuation date locks Rf.

How it is calculated

Rf ≈ Devlet tahvili YTM (nakit akımıyla aynı para birimi ve benzer vade)

Variables in the formula

• Rf: Risk-free yield

How to read it

Nominal Rf is high in high inflation; that is not “dear equity”, it is the nominal plane.

Numerical example

If the 10Y local bond YTM is 28%, the local Rf in the model is about 28% (liquidity and tax adjustments separate).

Definitions are educational. They are not investment, credit or tax advice.