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Estimating risk free rate in Russian rubbles

Government bond rate in rubble =5.5%


Default spread =3.25%-1.75%
Risk free rate = Government bond rate – Default spread =5.5%-1.5% = 4%

Estimating an equity risk premium for Russia


Historical premium for market that has matured= 5.00%
Country risk premium for Russia = 1.5% (21/15) = 2.10%
Total equity risk premium for Russia = 7.10%

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