Supplementary Files
Keywords
Financial market
Valuation of financial assets
Financial risk
Interest rates
How to Cite
Abstract
The traditional methodology for calculating the risk-free rate based on government bonds from developed economies does not adequately capture the specific risk of emerging markets. This research aimed to estimate the risk-free rate for Ecuador. The methodology used is based on an ordinary least squares estimation for time series data, considering the period 2013-2023. The key indicator for estimating the accounting beta, as well as the risk-free rate, is the Operating Return on Equity (OROE). The study highlighted that the risk-free rate for the Ecuadorian economy is 5.42% and the market
risk premium is 6.83%. This result was compared with the benchmark deposit rate of the Central Bank of Ecuador, which averaged 5.50% during the analyzed period.
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