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Yong asked 3 years ago

Hi, how do we determine risk-free rate? Based on stocks where we’ll be buying from? Or opportunity cost? Below is example of risk free rate. Based on below, if is opportunity cost, would risk-free rate should be 6%?

EPF (CPF): 6%
Govt Bonds
Malaysia: 3.6%
Singapore: 2.1%
Hong Kong: 1.6%
USA: 2.1%

1 Answers
Victor Chng answered 3 years ago

Hi Yong,
 
You are right, the risk free rate is based on the opportunity cost of the investment. If your EPF investment can give you 6% then your risk free rate will be 6%.