What is the risk-free rate?
Analysts use the risk-free rate to calculate various valuations. In this article, we discuss what the risk-free rate is and why it used. Definition This risk-free rate is rate of return on asset assuming there is no risk on the investment. This is a theoretical measurement as all investments carry a degree of risk. The yield of the 10 year government bond is typically used as the risk-free rate. This is the minimum return an investor should expect from a …