Blocked Cash and Risk-free asset: Difference between pages

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''Cash management''.
''Investment management - risk appetite - flight to quality - rates of return - risk-free rate of return - risk assets.''


Blocked cash is cash that is surplus to a business's requirements but unable to be used.
For practical investment management and portfolio management purposes, a risk-free asset is considered to be one on which the expected rate of investment return is so likely to be achieved, that it can be treated as near-enough risk free for the purpose.


Blocked cash often arises when a group has an offshore subsidiary which has accumulated cash as profits (or through the sale of capital assets) but is not permitted to distribute the cash to its parent as a dividend, loan repayment, interest, or capital reduction.
The usual example is short-dated debt obligations of a low-risk domestic central government.


Outside of regulatory disputes, cash becomes blocked because it is the host country's intention that surpluses be used for re-investment in the country. This is a trap which can be suffered in emerging markets where offshore investors had assumed that the domestic economy would develop to enable free movement of capital or to provide further investment opportunities to develop distributable profits.
For example in the United States, short-dated obligations of the US Treasury.




==See also==
In this context, all assets that are not risk-free assets, are classed as ''risk assets''.
*[[Cash management]]
*[[Distributable reserves]]
*[[Dividend]]


[[Category:Business_skills]]
The exact boundary between risk assets and risk-free assets can vary, depending on the purpose of the classification.
[[Category:Financial_management]]
 
[[Category:Planning_and_projects]]
 
[[Category:Technical_skills]]
== See also ==
[[Category:Corporate_financial_management]]
* [[Benchmark]]
[[Category:Financial_risk_management]]
* [[Capital asset pricing model]]
[[Category:Treasury_operations]]
* [[Credit spread ]]
* [[Expected rate of return]]
* [[Flight to quality]]
* [[Gilts]]
* [[Interest rate risk]]
* [[Investment management]]
* [[LIBOR]]
* [[Market risk premium]]
* [[Portfolio]]
* [[Rate of return]]
* [[RFR]]
* [[Risk appetite]]
* [[Risk asset]]
* [[Risk-free rate of return]]
* [[Risk-free rates]]
* [[Risk-off]]
* [[Risk-off asset]]
* [[Risk-on]]
* [[Treasury]]
 
[[Category:Accounting,_tax_and_regulation]]
[[Category:Financial_products_and_markets]]
[[Category:Risk_frameworks]]

Revision as of 05:49, 10 February 2024

Investment management - risk appetite - flight to quality - rates of return - risk-free rate of return - risk assets.

For practical investment management and portfolio management purposes, a risk-free asset is considered to be one on which the expected rate of investment return is so likely to be achieved, that it can be treated as near-enough risk free for the purpose.

The usual example is short-dated debt obligations of a low-risk domestic central government.

For example in the United States, short-dated obligations of the US Treasury.


In this context, all assets that are not risk-free assets, are classed as risk assets.

The exact boundary between risk assets and risk-free assets can vary, depending on the purpose of the classification.


See also

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