risk-free interest rate


risk-free interest rate
Describes return available to an investor in a security somehow guaranteed to produce that return. The risk-free interest rate compensate s the investor for the temporary sacrifice of consumption. Bloomberg Financial Dictionary

Financial and business terms. 2012.

Look at other dictionaries:

  • Risk-free interest rate — The risk free interest rate is the interest rate that it is assumed can be obtained by investing in financial instruments with no default risk. However, the financial instrument can carry other types of risk, e.g. market risk (the risk of changes …   Wikipedia

  • risk free rate — interest rate for a property that has certain profit …   English contemporary dictionary

  • Interest rate — Finance Financial markets Bond market …   Wikipedia

  • Interest rate swap — An interest rate swap is a derivative in which one party exchanges a stream of interest payments for another party s stream of cash flows. Interest rate swaps can be used by hedgers to manage their fixed or floating assets and liabilities. They… …   Wikipedia

  • Risk-Free Rate Of Return — The theoretical rate of return of an investment with zero risk. The risk free rate represents the interest an investor would expect from an absolutely risk free investment over a specified period of time. In theory, the risk free rate is the… …   Investment dictionary

  • Risk-Free Return — The theoretical rate of return attributed to an investment with zero risk. The risk free rate represents the interest on an investor s money that he or she would expect from an absolutely risk free investment over a specified period of time. In… …   Investment dictionary

  • Interest Rate Parity — A theory in which the interest rate differential between two countries is equal to the differential between the forward exchange rate and the spot exchange rate. Interest rate parity plays an essential role in foreign exchange markets, connecting …   Investment dictionary

  • Risk-Free Asset — An asset which has a certain future return. Treasuries (especially T bills) are considered to be risk free because they are backed by the U.S. government. Because they are so safe, the return on risk free assets is very close to the current… …   Investment dictionary

  • risk-free return —  The interest rate on the lowest risk investment, usually a U.S. government security, for that period of time.  ► Investors compare the yield premium over the risk free return versus the risk of the investment …   American business jargon

  • Real interest rate — The real interest rate is approximately the nominal interest rate minus the inflation rate (see Fisher equation and below for exact equation). Since the inflation rate over the course of a loan is not known initially, volatility in inflation… …   Wikipedia


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