Optimal capital structure 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 capital structure which results in the lowest Weighted Average Cost of Capital (WACC).
+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.
-.
-The most appropriate capital structure taking account of both:
+Theoretically risk free rates of ''investment'' return, for example in the Capital asset pricing model, are more often designated by 'Rf' or 'rf'.
-(i) The immediate cost saving benefits of a low WACC.
+==See also==
+*[[Capital asset pricing model]]
+*[[O/N]]
+*[[RFR WG]]
+*[[Risk-free rate of return]]
+*[[Risk-free rates]]
+*[[SONIA]]
-(ii) The potential flexibility and safety benefits of a more conservative capital structure (with a relatively lower proportion of debt finance).
+[[Category:Corporate_financial_management]]
+[[Category:Financial_products_and_markets]]
-== See also ==
-* [[Capital structure]]
-* [[Modigliani and Miller]]
-* [[Weighted average cost of capital]]
-* [[MCT]]
-[[Category:Corporate_finance]]
-[[Category:Long_term_funding]]