Risk free rate of return: Difference between revisions
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The rate of | (Rf). | ||
The theoretical rate of investment returns which can be earned on hypothetical investments which are considered to be risk-free for modelling purposes. | |||
The Capital asset pricing model (CAPM) incorporates this type of risk-free rate. | |||
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. | |||
==Interest rate benchmarks== | |||
The term 'risk-free rates' (RFRs) is also used in the context of interest rate benchmark rates. | |||
== See also == | == See also == | ||
* [[Benchmark]] | |||
* [[Capital asset pricing model]] | |||
* [[Credit spread ]] | * [[Credit spread ]] | ||
* [[Gilts]] | * [[Gilts]] | ||
* [[Hurdle rate]] | |||
* [[Interest rate risk]] | * [[Interest rate risk]] | ||
* [[LIBOR]] | |||
* [[RFR]] | |||
* [[Risk asset]] | |||
* [[Risk-free asset]] | |||
* [[Risk-free rate of return]] | |||
* [[Risk-free rates]] | |||
* [[Risk-off]] | |||
* [[Risk-off asset]] | |||
* [[Risk-on]] | |||
* [[Risk premium]] | |||
[[Category:Accounting,_tax_and_regulation]] | |||
[[Category:Financial_products_and_markets]] | |||
Latest revision as of 05:51, 10 February 2024
(Rf).
The theoretical rate of investment returns which can be earned on hypothetical investments which are considered to be risk-free for modelling purposes.
The Capital asset pricing model (CAPM) incorporates this type of risk-free rate.
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.
Interest rate benchmarks
The term 'risk-free rates' (RFRs) is also used in the context of interest rate benchmark rates.
