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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: 4 Jul 2013
  • Status: Current
  • Author: The Treasury
 

Methodology for Risk-free Discount Rates and CPI Assumptions for Accounting Valuation Purposes - June 2013 Review of Long-term Assumptions

Published 4 Jul 2013
Page updated 7 Aug 2013

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.

The Treasury has published the associated Methodology which comprises three papers; the original methodology dated July 2010 and two subsequent papers dated May 2012 and June 2013 (this paper). This paper documents the latest review of the long-term assumptions in the Methodology. The long-term nominal risk free rate has now been reduced to 5.5% and changes have been made to the bridging between the end of the market yield curve and the long-term assumptions.

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

This document is available in Adobe PDF and HTML format. Using PDF Files

Contents

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1 Introduction

2 Real long-term risk-free discount rates

3 Nominal long-term risk-free discount rates

4 Long-term inflation

5 Bridging assumption

6 Literature review

disc-rates-meth-rlea-jun13.pdf (1.39 MB) pp. (2),i,27
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