Difference between revisions of "Risk free rate of return"

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(CSV import)
 
(Source: http://www.bis.org/publ/bppdf/bispap72l.pdf)
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The rate of return which can be earned on investments which are considered to be near-enough risk-free for modelling purposes.
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The theoretical rate of return which can be earned on hypothetical investments which are considered to be risk-free for modelling purposes.
For example historically, domestic central government debt in the UK.
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Historically, the rates of return on certain types of domestic central government debt were considered to be a close enough proxy for such hypothetical risk-free investments.
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In the modern era, domestic central government debt is no longer considered to be risk-free for this purpose, nor for a number of other purposes for which it was historically considered to be risk-free.
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== See also ==
 
== See also ==
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* [[Gilts]]
 
* [[Gilts]]
 
* [[Interest rate risk]]
 
* [[Interest rate risk]]
 
 

Revision as of 11:56, 12 August 2013

The theoretical rate of return which can be earned on hypothetical investments which are considered to be risk-free for modelling purposes.


Historically, the rates of return on certain types of domestic central government debt were considered to be a close enough proxy for such hypothetical risk-free investments.

In the modern era, domestic central government debt is no longer considered to be risk-free for this purpose, nor for a number of other purposes for which it was historically considered to be risk-free.


See also