Risk-Free Interest Rate

(redirected from 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 compensataes the investor for the temporary sacrifice of consumption.

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.
References in periodicals archive ?
Theta and rho give information about option sensitivity to time and changes in the risk free interest rate.
We changed, previously, our risk free interest rate for Egypt, from 13% to 11%, to account for the monetary loosening cycle that commenced in February 2009.
The equity price (eqp) can be written recursively as dependent on profit per unit of capital (prof) and the discounted value of next period's equity price, where the discount factor is made up of a real risk free interest rate (rr) and an equity premium (eprem) :
represents the domestic risk free interest rate, "[r.
Krauss and Ross (1982) argue that, in the context of their model, the risk free interest rate should be considered as a "real" or inflation adjusted rate if expected claim costs are set at current prices.
EASi WorkStream also brings in the risk free interest rate for Black Scholes calculations and automatically applies it to determine the fair value calculation.
1) Consumer confidence & spending, (2) inflation & risk free interest rates, and (3) competitive currency devaluations are the primary risks," according to Mr.
Mr O'Halloran maintained QBE's 16 to 18 per cent insurance margin target range for the full year, although it's conditional on no further reductions in risk free interest rates and large individual risk and catastrophe claims not exceeding the group's allowance.
Under a new accounting rule (SFAS 115) effective on January 1, 1994, the Partnership was required to write down certain CMO residuals in its portfolio to "fair value" because there had been a decline in yield below risk free interest rates for investments of comparable duration.
Under the new accounting rule (SFAS 115) effective on January 1, 1994, the company was required to write down certain CMO residuals in its portfolio to "fair value" because there had been a decline in yield below risk free interest rates for investments of comparable duration.
The Company also announced that as a result of a new accounting rule -- SFAS 115 -- which went into effect on January 1, 1994 the cost basis of individual mortgage securities are required to be written down to "fair value" if there was a decline in yield below risk free interest rates for investments of comparable duration.
Gavula also announced that the Board has been informed that, effective January 1, 1994, the Partnership is subject to a new accounting rule -- SFAS 115 -- which requires the cost basis of an individual security be written down to "fair value" if there is a decline in yield below risk free interest rates for investments of comparable maturity.

Full browser ?