Kroll Normalized Risk-free Rate Guidance for United Kingdom and Canada

The Equity Risk Premium (ERP) is a key input used to calculate the cost of capital within the context of the Capital Asset Pricing Model (“CAPM”) and other models. Kroll regularly reviews fluctuations in global economic and financial market conditions that warrant a periodic reassessment of the ERP and the accompanying risk-free rate.

Kroll has published its United Kingdom and Canada normalized risk-free rates since 2014 and 2017 respectively.

Download a table summarizing the United Kingdom guidance for the period December 2014 – present.

Download a table summarizing the Canadian guidance for the period March 2017 – present.

Historical Recommendations

• Kroll Lowers Its Recommended Normalized Risk-Free Rate for Germany from 3.0% to 2.5%, Effective March 31, 2024
• Impact of High Inflation and Market Volatility on Cost of Capital Assumptions, Effective October 18, 2022
• Kroll Recommends Using a Spot 20-Year UK Government Bond Yield When Higher than the Normalized UK Risk-Free Rate
• Normalized Risk-Free Rates for Canada and UK have Increased, Effective September 1, 2022
• Normalized Risk-Free Rates for Global Economies have Increased, Effective May 17, 2022
• Brexit: The Impact on Cost of Capital