Opportunity loss and RFR: Difference between pages

Revision as of 12:29, 24 March 2019

Risk-Free Rate.

The abbreviation 'RFR' usually refers to risk-free benchmark interest rates, such as SONIA.

Also known as near risk-free rates, recognising that such rates are never entirely risk-free.

Theoretically risk free rates of investment return, for example in the Capital asset pricing model, are more often designated by 'Rf' or 'rf'.

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+Risk-Free Rate.
-The worsening of a financial position when effectively 'locked in' to a course of action or to a particular fixed price or rate, compared with the alternative which could have been followed without the lock-in.
+The abbreviation 'RFR' usually refers to risk-free benchmark interest rates, such as SONIA.
-For example, there is always a risk of opportunity losses when we use a fixing instrument to effectively lock in a (committed) market price.
+Also known as ''near'' risk-free rates, recognising that such rates are never entirely risk-free.
-We are effectively locked in to the predetermined and committed market price, instead of being free to take advantage of actual market rates (if they turn out to be more favourable).
+Theoretically risk free rates of ''investment'' return, for example in the Capital asset pricing model, are more often designated by 'Rf' or 'rf'.
-This type of loss is also sometimes known as an 'opportunity cost'.
+==See also==
+*[[Capital asset pricing model]]
+*[[O/N]]
+*[[RFR WG]]
+*[[Risk-free rate of return]]
+*[[Risk-free rates]]
+*[[SONIA]]
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+[[Category:Corporate_financial_management]]
+[[Category:Financial_products_and_markets]]
-Any loss resulting from a failure to take advantage of an opportunity.
-== See also ==
-* [[Fixing instrument]]
-* [[Opportunity cost]]
-* [[Opportunity risk]]
-* [[Regret risk]]