# Riskless rate of return

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The net cost is $548,812, precisely the same as if the liability had been discounted and funded using the 4 percent riskless rate of return.

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.

Because the real riskless rate of return apparently did not change much during that five-year period, anything short of such an extraordinary permanent increase in the growth of structural productivity, and thus earnings, (4) implies a significant fall in real equity premiums in those years.

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.

where d = B exp (-rt) / V (a quasi debt-to-asset ratio where the promised payment on debt is valued at the riskless rate of return, r, and P (d) is the per dollar price of risky debt.

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.

These models derive asset's rates of return relative to a riskless rate of return.

Our dynamic model rebalances funds based on a combination of factors, including market volatility, portfolio volatility, portfolio return, and riskless rate of return.

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