2 thoughts on “Risk free rate for India

  1. Hi, Why cant we treat the 10 year govt bond yield for India as the risk free rate ? Why do we have to subtract the default spread from that?


    1. Hi Nithya,

      The Indian government is not totally risk free as evidenced by a rating of Baa2 by the rating agencies. For the purpose of my exercise, I consider countries rated AAA as risk free. That’s is why we need to subtract the default spread.

      Hope that clarifies.



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