I am an Indian domestic investor and hence when I am looking at Indian companies, I should look at RBI (Central Bank) 10 year bonds yield to calculate the risk free rate.
But Damodaran Sir calculated the same by taking the sum of US domestic bond and India's rating by Moody.

Can someone shed some light which method should be followed when?

Question

I am an Indian domestic investor and hence when I am looking at Indian companies, I should look at RBI (Central Bank) 10 year bonds yield to calculate the risk free rate.
But Damodaran Sir calculated the same by taking the sum of US domestic bond and India's rating by Moody.

Can someone shed some light which method should be followed when?

anonymous · Answer

Damodaran's method because he never makes mistakes. On a serious note, the 10 year indian bond is not risk free so you can't use its yield as the risk free rate. You have to deduct the default spread from the 10 year indian bond yield.