risk-free return

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

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.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
For Banks, longer tenor bonds, despite relatively stuffed spreads still offers appeal given with flat private sector offtakes, fresh lending yield of 50bps, and risk-free return on these investments where credit risks could surge in the ongoing macro environment.
For Banks, longer tenor bonds, despite relatively stuffed spreads still offers appeal to Banks given, flat private sector offtakes, fresh lending yield of 50bps, and risk-free return on these investments where credit risks could surge in the ongoing macro environment (CY19/20F cost of provisioning: 0.7/0.8%).
Analysts add premium to risk-free returns. Government securities currently provide a risk-free return of 13-14pc.
Overall, during the observation period, the Sharpe ratio value of all Sharia mutual funds in the study resulted in a negative Sharpe ratio, meaning that the return generated by the mutual funds in the sample was not higher than their risk-free return.
Mr Lane's current venture - called Sporting Memorabilia Investment - promises: "We source the items using our knowledge database and over a variation of investment periods, we offer a near risk-free return on your investment with the added bonus that our clients can enjoy or store these "choice" items of sporting memorabilia.
I would characterise as deluded those who expect a substantial risk-free return.
An 8% inflation-adjusted, risk-free return is unheard of in today's investing environment.
Sortino and van der Meer [12] presented the Sortino ratio as a variation of Sharpe ratio that adjusted the expected return for the risk of falling short of the risk-free return. Keating and Shadwick [13] proposed the Omega function as a natural performance measure to analyze returns distributions with the risk of the downside, lower partial moment, and gain-loss.
It might be that Hammerson is enjoying a risk-free return from the few tenants currently inhabiting the site - but the opportunity must be greater.
While we have [r.sup.(I)] = [r.sub.f], with [r.sub.f] denoting the risk-free return, the second return [r.sup.(II)] is modeled through a normal distribution.
In some cases, the risk-free return for such a transaction financed with borrowed money can exceed 10 percent after deducting loan and storage costs.
The daily return for each deal has three pieces: the return on the target, the return from a short position in bidder's shares, and the risk-free return on the short sale proceeds.