Difference between revisions of "Real risk-free rate of interest"

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(Created page with "Real risk-free rate of interest, ''r*'', is the interest rate on a risk-free security in an economy with zero inflation. The real risk-free rate could also be called the p...")
 
 
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According to [[Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition)]],
 
According to [[Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition)]],
 
:[[Real risk-free rate of interest]], ''r*''. The interest rate on a risk-free security in an economy with zero inflation. The real risk-free rate could also be called the pure rate of interest since it is the rate of interest that would exist on very short-term, default-free U.S. Treasury securities if the expected rate of inflation were zero.
 
:[[Real risk-free rate of interest]], ''r*''. The interest rate on a risk-free security in an economy with zero inflation. The real risk-free rate could also be called the pure rate of interest since it is the rate of interest that would exist on very short-term, default-free U.S. Treasury securities if the expected rate of inflation were zero.
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According to [[Fundamentals of Financial Management by Eugene F. Brigham and Joel F. Houston (15th edition)]],
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:[[Real risk-free rate of interest]], ''r*''. The rate of interest that would exist on default free U.S. Treasury securities if no inflation were expected.
  
 
==Related concepts==
 
==Related concepts==

Latest revision as of 22:43, 1 November 2019

Real risk-free rate of interest, r*, is the interest rate on a risk-free security in an economy with zero inflation. The real risk-free rate could also be called the pure rate of interest since it is the rate of interest that would exist on very short-term, default-free U.S. Treasury securities if the expected rate of inflation were zero.


Definitions

According to Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition),

Real risk-free rate of interest, r*. The interest rate on a risk-free security in an economy with zero inflation. The real risk-free rate could also be called the pure rate of interest since it is the rate of interest that would exist on very short-term, default-free U.S. Treasury securities if the expected rate of inflation were zero.

According to Fundamentals of Financial Management by Eugene F. Brigham and Joel F. Houston (15th edition),

Real risk-free rate of interest, r*. The rate of interest that would exist on default free U.S. Treasury securities if no inflation were expected.

Related concepts

Related lectures