Nominal risk-free rate of interest
Nominal risk-free rate of interest, rRF, is the real risk-free rate plus a premium for expected inflation. The short-term nominal risk-free rate is usually approximated by the U.S. Treasury bill rate, and the long-term nominal risk-free rate is approximated by the rate on U.S. Treasury bonds.
Definitions
According to Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition),
- Nominal risk-free rate of interest, rRF. The real risk-free rate plus a premium for expected inflation. The short-term nominal risk-free rate is usually approximated by the U.S. Treasury bill rate, and the long-term nominal risk-free rate is approximated by the rate on U.S. Treasury bonds.
Related concepts
- Financial management. A combination of enterprise efforts undertaken in order to procure and utilize monetary resources of the enterprise.
