Risk-free rate refers to the yield on top-quality government stocks. It is often called the risk-free interest rate. The risk-free benchmark, for the majority of investors, is the US Treasury yield.
In theory, the risk-free rate is the minimum return an investor expects for any investment. Investors will not accept additional risk unless the potential rate of return is greater than the risk-free rate. If you are finding a proxy for the risk-free rate of return, you must consider the...
Damodaran, A. (2008), "What is the riskfree rate? A Search for the Basic Building Block", New York University, Stern School of Business.Damodaran, A., 2008. What is the risk free rate? A Search for the Basic Building Block, Stern School of Business....
Cost of equity = risk-free rate + beta × (required return – risk-free rate) = 4% + 0.75 (7% – 4%) = 4% + (0.75 x 3%) = 4% + 2.25% = 6.25% The required return of the stock is 6.25%, which means that investors see a growth potential in the firm since they are willin...
The risk-free rate puzzle (RFRP) is a market anomaly observed in the persistent difference between the lower historic real returns of government bonds compared to equities. This puzzle is the inverse of theequity premium puzzleand looks at the disparity from the perspective of the lower returning...
A risk-free rate of return is the theoretical rate of return on an investment that has zero risk associated with it. There is no such thing as a true risk-free rate of return. The risk-free rate of return can help investors evaluate economic conditions and compare various assets. ...
百度试题 题目What is the risk premium for a stock when the risk free rate is 3%, the S&P500 index has an expected return of 12% and the stock has a beta of 3?相关知识点: 试题来源: 解析 27% 反馈 收藏
What is the risk-free interest rate? The risk-free interest rate is the return on an investment that is considered free from any risk of financial loss. It represents the minimum return an investor would expect from an absolutely risk-free investment over a specific period. In practice, the...
The risk free rate is the return on an investment that carries no risk or zero risk. It is the minimum return that an investor expects.
If the risk-free rate is 6.80% and the risk premium is 7.8%, what is the required return? (Round your answer to 1 decimal places.) Required Return: The required rate of return on any investment can be divided in two parts. The ...