Riskless rate of return

Riskless rate of return

The rate earned on a riskless asset.
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According to equation (5), the investor will invest in an asset with an expected rate of return less than the riskless rate of return if the asset return has a positive relationship with the marginal utility of consumption.
The asset pays off a riskless rate of return equal to the agent's intertemporal rate of time preference--the rate of return with which the agent's optimal consumption path absent all uncertainty would be constant forever.
Since 2003, the riskless rate of return has been abnormally low as central banks kept overnight rates low for a long time after a brief deflation scare in the United States and a prolonged scare in Japan.
Only the relevant economic factors are considered in this analysis: the price of individually purchased goods, product price, warranty expiration, time and a riskless rate of return from an appropriate Treasury security.
The accompanying chart compares at varying loss ratios the present value net ceded premium relative to the present value ceded losses at a riskless rate of return of 6% per annum.
6] In constructing this estimate, we start with 1977 (premanipulation) market values, subtract dividend payments and add public offerings, assuming that in the absence of manipulation that monthly bank returns would have been equal to the riskless rate of return plus 50% of the industrial shares' excess monthly return.
The Sharpe Utility Measure uses an estimate of the investor's risk tolerance rather than the riskless rate of return as an indicator of the investor's utility function.
the premium in the market for equity issues over the riskless rate of return.
The artist and the potential purchasers differ from each other in two respects; (1) each participant is characterized by his own attitude towards risk, as represented by the Arrow-Pratt measure of absolute risk aversion, -U[double prime]/U[prime]; (2) each participant has a riskless rate of return that he applies to measure his willingness to tradeoff intertemporal variations in his income.
Our dynamic model rebalances funds based on a combination of factors, including market volatility, portfolio volatility, portfolio return, and riskless rate of return.