Risk free rate of return: Difference between revisions
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imported>Doug Williamson (Source: http://www.bis.org/publ/bppdf/bispap72l.pdf) |
imported>Doug Williamson m (Added internal reference to Capital asset pricing model.) |
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== See also == | == See also == | ||
* [[Capital asset pricing model]] | |||
* [[Credit spread ]] | * [[Credit spread ]] | ||
* [[Gilts]] | * [[Gilts]] | ||
* [[Interest rate risk]] | * [[Interest rate risk]] | ||
Revision as of 12:03, 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.
