In their most common variation, economic models calculate an interest rate through a combination of a risk-free interest rate and a number of premiums associated with different aspects of the loan – e.g. default risk, liquidity risk, expected inflation or maturity. In some instances, economic models would also include elements to compensate the lender’s operational expenses.
TPG2022 Chapter X paragraph 10.105
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Category: OECD Transfer Pricing Guidelines (2022), TPG2022 Chapter X: Transfer Pricing Aspects of Financial Transactions | Tag: Economic modelling, Financial transactions, Interest rate, Intra-group loan, Loan, Treasury functions
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