risk-free return

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Risk-Free Return

The return on any investment with such low risk that the risk is considered to not exist. A common example of a risk-free return is the return on a U.S. Treasury security. The risk-free return exists in order to compensate the investor for the temporary tying up of his/her capital, even though it is not put at risk. See also: Capital Allocation Line, riskless investment.

risk-free return

The annualized rate of return on a riskless investment. This is the rate against which other returns are measured. See also excess return.

Risk-free return.

When you buy a US Treasury bill that matures in 13 weeks, you're making a risk-free investment in the sense that there's virtually no chance of losing your principal (since the bill is backed by the US government) and no threat from inflation (since the term is so short).

Your yield, or the amount you earn on that investment, is described as risk-free return. By subtracting the risk-free return from the return on an investment that has the potential to lose value, you can figure out the risk premium, which is one measure of the risk of choosing an investment other than the 13-week bill.

References in periodicals archive ?
With this Biotechnology Investment Credit from the state, an investor receives a 50% risk free return the following tax year.
Effective measures on three main criteria Gordon model ( projected dividend discount rate growth rate), including industry outlook, earnings, operating cash flow, payment of dividends, market beta, risk free return rate of earnings growth and dividend growth rates were.
Basil Al-Ghalayini, CEO of BMG Financial Group, said: "In the past, sovereign debt used to be classified as risk free return.
It is the trust of the valuable clients that they prefer to invest in NSS for better and risk free return without any hidden charges, it added.
fm] = average risk free return over the sample period, and sd = standard deviation of excess returns over the sample period.
fm] is the average risk free return over the time period; [R.
This special offer also includes a 60-day risk free return policy for first time customers.
I, therefore, use the same risk free return to estimate the risk premia of Islamic stocks as I use for industries.
So if you see offers of risk free returns which are much higher than the international monetary bank base rate, you have to wonder how they provide such returns.
The portfolio at point F is independent of external variables, and therefore earns risk free returns [r.
With virtually risk free returns of seven per cent to more than ten per cent on Zopa on everything from pounds 10 to pounds 1 million, they would be silly to ignore peer-to-peer lending.

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