This is to ensure transparency on all steps in the identification and adoption of a new

risk free rate.

UAE banks with dividend yields in excess of the

Risk Free Rate are not pricing in the attractiveness of their yields, we think (Chart 1).

In the CAPM, asset i's equilibrium expected return is Ki = Rf + iM [RPM], where Rf is

risk free rate of interest, iM is the systematic risk (beta) of the asset I relative to the market portfolio, and RPM is the market risk premium.

The factors are the market risk, measured as the S&P 500's returns in excess of a

risk free rate, and credit risk, measured as the excess return of a synthetic bond portfolio with average Latin American country risk.

Abou Hend went on to explain that in the case of slow demand, which is a possibility, companies will decline this kind of assessment, especially as the

risk free rate will jump from 25% to a range of 30%-32% for five-year term investments.

Therefore, market practitioners attempt to add an arbitrary value to the

risk free rate to determine their required rate of return.

If there exists a risk free asset providing monetary services, its

risk free rate obeys:

The two-factor models achieved according to the research carried out by Black, Jensen and Scholes states that a zero-beta portfolio with an predicted return, Rz surpasses the

risk free rate of interest, Rf.

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.

Risk free rate is 4%, rate of return on market portfolio is 18%.