Risk-free asset

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Risk-free asset

An asset whose future normal return is known today with certainty.

Risk-Free Asset

An asset in which the return is known with certainty. The certainty generally comes from a supreme amount of confidence in the issuer of the asset; for example, Treasury securities are considered risk-free because the United States government is considered the best possible issuer. Critics contend that there is no such thing as a risk-free asset because, in theory, even the US government could default. However, risk-free assets have such a low level of risk that it may be ignored. Nonetheless, risk-free assets usually have a low rate of return, and, as a result, even these are exposed to inflation risk.

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'In this context, risk-free assets don't deliver profitability.

BBVA-Five trends for the future in asset management

Treasuries, the highest yielding risk-free assets available.

FX Update: Both the dollar and yen outperformed

The introduction of the risk-free asset in this analysis means that finding an optimal portfolio for a given level of risk tolerance can be separated into two easier problems: first finding an optimal mix of market securities that does not vary with risk tolerance, and then combining it with an appropriate amount of risk-free assets (Buiter 2003).

Calculating the Efficient Frontier for the Portuguese Stock Market

He said that due to rising US Treasury interest rates, foreign fund managers are diverting investment back home in risk-free assets from most high-risk, low return emerging markets.

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Low-inflation regimes have tended to yield a negative correlation between the prices of risky and risk-free assets, whereas high-inflation regimes have tended to yield a positive correlation.

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Third, as yields on risk-free assets such as US treasuries rise, investors are likely to demand a higher risk premium for holding riskier assets such as equities and emerging market bonds, thus causing the value of these assets to decline.

Rising inflation concerns spook global markets, says QNB

Interest-bearing CBDC could have a rate of return in line with risk-free assets such as short-term government securities.

5 questions about central banks and digital currency

The rates of swap IRS 1Y served as the rates on risk-free assets. The market was represented with the WIG --the main index of the Warsaw Stock Exchange, which covers share prices of all listed companies.

DEGREE OF CONVERGENCE OF THE EFFICIENCY OF THE POLISH EQUITY INVESTMENT FUNDS OBTAINED WITH MEASURES BASED ON THE SHARPE RATIO

When a financial market experiences a slump, investment returns on stocks (risky assets) can fall below returns on bonds (risk-free assets).

Net contribution, liquidity, and optimal pension management

However, at a time when returns on risk-free assets are so low, clients are increasingly focusing on direct investments, including real estate, infrastructure, new technologies, aircraft and gold.

Adapting for future growth

In the n stage, the yield of the risk-free assets is determined, which is denoted as [r.sub.n]; the yield of J kind of risk assets is [r.sup.j.sub.n], j = 1, 2, ***, J.

A dynamic programming model of the optimal investment based on liquid asset, uncertainty and asset portfolio selection

'Having said this, uncertainties over Brexit will cause the Fed (US Federal Reserve) and other central banks to be dovish - resulting in yields on risk-free assets remaining low longer.