What is 'RiskFree Return'
Riskfree return is the theoretical rate of return attributed to an investment with zero risk. The riskfree rate represents the interest on an investor's money that he or she would expect from an absolutely riskfree investment over a specified period of time.
BREAKING DOWN 'RiskFree Return'
In theory, the riskfree rate is the minimum return an investor should expect for any investment, as any amount of risk would not be tolerated unless the expected rate of return was greater than the riskfree rate.
In practice, however, the riskfree rate does not technically exist; even the safest investments carry a very small amount of risk. Thus, investors commonly use the interest rate on a threemonth U.S. Treasury bill as a proxy for the riskfree rate because shortterm governmentissued securities have virtually zero risk of default.

RiskFree Rate Of Return
The theoretical rate of return of an investment with zero risk. ... 
RiskFree Asset
An asset which has a certain future return. Treasuries (especially ... 
RiskNeutral Measures
A theoretical measure of probability derived from the assumption ... 
Capital Allocation Line  CAL
A line created in a graph of all possible combinations of risky ... 
Market Risk Premium
The difference between the expected return on a market portfolio ... 
OptionAdjusted Spread (OAS)
A measurement of the spread of a fixedincome security and the ...

Investing
RiskFree Rate of Return
The riskfree rate of return is the theoretical rate of return of an investment with zero risk. The riskfree rate represents the interest an investor would expect from an absolutely riskfree ... 
Investing
How Safe Are U.S. Bonds?
U.S. Treasury securities are often described as riskfree investments, but that is just not true. 
Trading
How & Why Interest Rates Affect Futures
There are at least four factors that affect change in futures prices, including risk freeinterest rates, particularly in a noarbitrage environment. 
Investing
What Investors Should Know About Interest Rates
Understanding interest rates helps you answer the fundamental question of where to put your money. 
Investing
More Ways to Evaluate Portfolio Performance
The Jensen measure is another tool investors use to include risk when measuring portfolio performance. 
Investing
Why RiskFree Investments Don't Exist
We explain the risks inherent with all types of investments and why riskfree investments do not exist. 
Investing
Find The Right Discount Rate Amid Post2007 Risks
OIS discounting has become part of standard valuation techniques, in a market in which there is more uncertainty and less proxies for the riskfree rate. 
Investing
Understanding The Sharpe Ratio
This simple ratio will tell you how much that extra return is really worth. 
Investing
Understanding RiskReturn Tradeoff
The essence of riskreturn tradeoff is embodied in the common phrase “no risk, no reward.” 
Financial Advisor
Measure Your Portfolio's Performance
Learn three ratios that will help you evaluate your investment returns.

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