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. ... 
RiskNeutral Measures
A theoretical measure of probability derived from the assumption ... 
Market Risk Premium
The difference between the expected return on a market portfolio ... 
Capital Asset Pricing Model  CAPM
A model that describes the relationship between risk and expected ... 
Cost Of Equity
In financial theory, the return that stockholders require for ... 
Fiduciary Call
A cost effective strategy designed to limit the costs associated ...

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
Understanding Market Risk Premium
Market risk premium is equal to the expected return on an investment minus the riskfree rate. The riskfree rate is the minimum rate investors could expect to receive on an investment if it ... 
Financial Advisor
RiskFree & 20% Return? More Like 100% Scam
An investment that promises a riskfree return of 20% is 100% likely to be a scam. 
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
How to Calculate Risk Premium
Think of a risk premium as a form of hazard pay for risky investments. 
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
What's the OptionAdjusted Spread?
The optionadjusted spread, or OAS, measures a fixedincome security rateâ€™s spread and the riskfree rate of return thatâ€™s adjusted to account for an embedded option. 
Investing
Explaining the Capital Market Line
The capital market line (CML) depicts the level of additional return above the riskfree rate for each change in the level of risk.

How is it possible for a rate to be entirely riskfree?
Find out whether there really is such a thing as a riskfree rate of return, and learn why taking the idea of riskfree rates ... Read Answer >> 
How is the riskfree rate of interest used to calculate other types of interest rates ...
Learn how the riskfree rate is used to compare the yields on bonds, and understand how Tbills are used as a proxy for the ... Read Answer >> 
What is the correlation between equity risk premium and risk?
Learn about the relationship between the riskfree rate of return and the equity risk premium, and understand how the riskfree ... Read Answer >> 
Is the market risk premium the same for stocks and bonds?
Take a look at historical equity risk premium and credit spreads in the United States, which suggest that equities carry ... Read Answer >> 
How is bond yield affected by monetary policy?
Learn about how bond yields are affected by monetary policy. Monetary policy determines the riskfree rate of return, which ... Read Answer >> 
How do I calculate the cost of equity using Excel?
Learn how to calculate the cost of equity in Microsoft Excel using the capital asset pricing model, or CAPM, including brief ... Read Answer >>