Since merger spreads incorporate an interest rate component, an increase in the

risk free rate may increase the returns of merger arbitrage portfolios.

In defining a credit crunch we aim to distinguish 'normal' shifts in loan supply (due for instance to changes in the

risk free rate from a monetary policy decision) from excessive contractions in credit.

For instance, the present value at the

risk free rate [r.

We made slight revisions to our assumptions, but thanks mainly to a lower

risk free rate and incorporating higher multiples-based valuation, we arrive at a higher target share price of TRY8.

The lessons of the Asian Financial Crisis, in particular, were that even countries running large government surpluses would benefit from the creation of a local currency bond market, as the true

risk free rate was twice if not three times the USD 30-year bond yield.

Cash flows are discounted at WACC, while investments are discounted at

risk free rate account.

Out of the MSM listed stocks, 25 stocks had positive returns, 19 stocks had returns in excess of the country s

risk free rate and 9 companies had double digit price returns.

The

risk free rate chosen in this project is the rate of return of government bonds for 1 year maturity for the current year.

The general ride to use the

risk free rate seems carded over from when the valuation objective was fair value.

the

risk free rate of interest, the contract duration, the strike price, and the asset value at inception) are given, and the premia can be easily computed, using the formulas developed in the paper.

In principle, cost of equity consists of the

risk free rate of return and the premium expected for risk which investors could incur when investing in company's equity.

The second graph of Figure 9 shows that under all the three conditions when the riskfree rate of return increases the individual reduces life insurance purchases, though at different speeds--faster under Case 2 (when the stock return is fixed ) than under Case 1 (when stock return increases with the

risk free rate of return).