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  2. Risk-free rate - Wikipedia

    en.wikipedia.org/wiki/Risk-free_rate

    The risk-free rate is also a required input in financial calculations, such as the Black–Scholes formula for pricing stock options and the Sharpe ratio. Note that some finance and economic theories assume that market participants can borrow at the risk-free rate; in practice, very few (if any) borrowers have access to finance at the risk free ...

  3. Risk-free bond - Wikipedia

    en.wikipedia.org/wiki/Risk-free_bond

    A risk-free bond is a theoretical bond that repays interest and principal with absolute certainty. The rate of return would be the risk-free interest rate. It is primary security, which pays off 1 unit no matter state of economy is realized at time +. So its payoff is the same regardless of what state occurs.

  4. Security market line - Wikipedia

    en.wikipedia.org/wiki/Security_market_line

    R f is a risk-free rate. When used in portfolio management, the SML represents the investment's opportunity cost (investing in a combination of the market portfolio and the risk-free asset). All the correctly priced securities are plotted on the SML. The assets above the line are undervalued because for a given amount of risk (beta), they yield ...

  5. Risk-Free Rate: Definition and Usage - AOL

    www.aol.com/news/risk-free-rate-definition-usage...

    Continue reading ->The post Risk-Free Rate: Definition and Usage appeared first on SmartAsset Blog. When building an investment portfolio, finding the right balance between risk and reward is ...

  6. Internal ratings-based approach (credit risk) - Wikipedia

    en.wikipedia.org/wiki/Internal_Ratings-Based...

    The capital charge is equivalent to the potential loss on the institution’s equity portfolio arising from an assumed instantaneous shock equivalent to the 99th percentile, one-tailed confidence interval of the difference between quarterly returns and an appropriate risk-free rate computed over a long-term sample period.

  7. Risk–return spectrum - Wikipedia

    en.wikipedia.org/wiki/Risk–return_spectrum

    The lowest of all is the risk-free rate of return. The risk-free rate has zero risk (most modern major governments will inflate and monetise their debts rather than default upon them), but the return is positive because there is still both the time-preference and inflation premium components of minimum expected rates of return that must be met ...

  8. Risk premium - Wikipedia

    en.wikipedia.org/wiki/Risk_premium

    In the stock market the risk premium is the expected return of a company stock, a group of company stocks, or a portfolio of all stock market company stocks, minus the risk-free rate. [6] The return from equity is the sum of the dividend yield and capital gains and the risk free rate can be a treasury bond yield. [7]

  9. Are Risk-Free Assets Worth Investing in During Inflation? - AOL

    www.aol.com/finance/risk-free-assets-worth...

    When the market fluctuates, some investors get scared and want to eliminate risk from their portfolios. Risk-free assets provide a safe harbor against market volatility, but that safety comes at a ...