DCF & WACC
In CAPM, what do you use for the risk-free rate and why?
Model answer
Use the yield on a long-dated government bond in the cash flows' currency, typically the 10-year (sometimes 20- or 30-year) Treasury for USD. The rationale: the risk-free rate should match the…
The full, human-reviewed answer is in the bank.
Sign up free and Daily 10 serves you 10 questions a day from all 2,300+ — or go Pro for unlimited reps.
Pro unlocks every model answer — $19.99/mo.
More from DCF & WACC
- Walk me through a DCF.
- Why do you use unlevered free cash flow in a DCF and how do you calculate it?
- What is WACC and how do you calculate it?
- What are the two ways to calculate terminal value, and how do they differ?
- What discount rate do you use if you're discounting levered free cash flow?
- Two identical companies, one has more debt. Which has the higher WACC?
Try the real thing
1 / 3DCF & WACC
Why do you use unlevered free cash flow in a DCF and how do you calculate it?
Superday coming up? Take the cheat sheet.
The technicals and stories to have cold before you walk in — free, one email, no mailing list.
Free tier: 20 cards + 10 daily reps + ALL drills — no credit card required.