Table A1 Components of the expected rate... | Emerald Publishing

Table A1

Components of the expected rate of return

Classification	Factor decomposition of expected rate of return
Domestic bonds	Risk-free interest rate (estimation) + term spread + credit spread + expected capital gain or loss
Overseas bonds	Risk-free interest rate (estimation) + credit spread + expected capital gain or loss + foreign exchange hedge premium
Stock	GDP (estimation) + CPI (estimation) + dividend yield (prediction)
Alternative investment	Weighted average of expected return by sector (Assumptions: Real Estate: Private Equity Fund: Infrastructure ratio of 4:4:2 & Domestic: Foreign ratio of 5:5)

Classification	Factor decomposition of expected rate of return
Domestic bonds	Risk-free interest rate (estimation) + term spread + credit spread + expected capital gain or loss
Overseas bonds	Risk-free interest rate (estimation) + credit spread + expected capital gain or loss + foreign exchange hedge premium
Stock	GDP (estimation) + CPI (estimation) + dividend yield (prediction)
Alternative investment	Weighted average of expected return by sector (Assumptions: Real Estate: Private Equity Fund: Infrastructure ratio of 4:4:2 & Domestic: Foreign ratio of 5:5)