Fact Sheet - Approaches for estimating implied market risk premiums and measuring economic uncertainty in Australia

In this presentation, we discuss the specification of the 3 dividend discount models, which are referred to as Damodaran (2013), Bank of England (2002) and Bank of England (2010) models in our Final Report on the Review of WACC Methodology, and demonstrate how we estimate the implied market risk premiums based on these models. Also, we introduce the methodology employed to construct an index of economic uncertainty in Australia (ie, the uncertainty index), and discuss how we use the uncertainty index in the WACC determination process.