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Methodology for Risk-free Discount Rates and CPI Assumptions for Accounting Valuation Purposes: Review of Long-term Economic Assumptions

Publication Details

  • Methodology for Risk-free Discount Rates and CPI Assumptions for Accounting Valuation Purposes: Review of Long-term Economic Assumptions
  • Published: 6 Jul 2012
  • Status: Current
  • Author: The Treasury
 

Methodology for Risk-free Discount Rates and CPI Assumptions for Accounting Valuation Purposes - May 2012 Review of Long-term Assumptions

Published 6 Jul 2012

The purpose of this paper is to document a review of the long-term assumptions that were originally set in the Methodology published July 2010.

While the long-term economic assumptions remain the same as in the original Methodology, the bridging assumption has been refined as a result of the May 2012 review. The bridging assumption bridges the end of the yield curve to the long-term rate and is now subject to a maximum slope, thereby lengthening the smoothing period automatically in extreme circumstances.

This methodology is not intended to apply to the valuation of traded securities.

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1.  Introduction

2.  Long-term real risk-free discount rates

3.  Long-term nominal risk-free discount rates

4.  Bridging the yield curve to the long-term rate

5.  Long-term inflation

disc-rates-meth-rlea-may12.pdf (862 KB) pp. (2),i,23
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