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Risk-free interest is the rate of interest which exists when the expected risk of the economic transaction is zero. In most cases, the general interest rates in major banks of a country reflects the nominal interest rate, which is risk free. The real interest rate is simply the nominal interest rate minus the rate of inflation.

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Q: What is the rate of Risk-Free interest?
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Related questions

If beta coefficient is 1.4 and the risk free rate is 4.25 and the market risk premium is 5.50 what is the required rate of return?

Require Rate of Return is formulated as: Riskfree Rate + Beta(Risk Premium) Required Rate of Return = 4.25 + 1.4 (5.50) = 11.95%


What is nominal interest?

Nominal InterestA nominal interest rate is the interest rate that does not compensate for inflation. This is used in relation to "effective interest rate" or "real interest rate."" Real Interest Rate = Nominal Interest Rate - Inflation Rate " Improvement suggested by Palash Bagchi.


What does the nominal interest rate mean?

A nominal interest rate is an interest rate that does not factor in the rate on inflation. Nominal interest rate could also refer to an interest rate that does not adjust for the full effect of compounding.


How does the real interest rate relate to the nominal interest rate?

A real interest rate and a nominal interest rate are quite similar. The only real difference between the two interest rates are that a nominal interest rate include the cost of inflation where as the real interest rate does not.


Risk free rate is 5 and the market risk premium is 6 What is the expected return for the overall stock market What is the required rate of return on a stock that has a beta of 1.2?

Expected return= risk free rate + Risk premium = 11 rate of return on stock= Riskfree rate + beta x( expected market return- risk free rate)


What is the formula to calculate monthly interest rate if the annual interest rate is known?

Annual Interest Rate divided by 12= Monthly Interest Rate


What does nominal interest rates means?

A nominal interest rate is an interest rate that does not factor in the rate on inflation. Nominal interest rate could also refer to an interest rate that does not adjust for the full effect of compounding.


How do you convert annual interest rate to monthly?

Let i = annual rate of interest. Then i' = ((1+i )^(1/12))-1 Where i' = monthly rate of interest


What is the Formula for simple interest rate?

The answer for rate in simple interest is =rate= simple interest\principle*time


What does effective interest rate mean?

An effective annual interest rate considers compounding. When the principle is compounded multiple times each year the interest rate increased to be more than the stated interest rate. The increased interest rate is the effective annual interest rate.


What is compounding rate?

Compounding rate is the interest rate at which the rate grow faster than the simple interest on deposit or loan made. It is also said "interest on interest".


What does representative mean with regard to interest rates?

A representative interest rate is an interest rate that is exemplary or acrhetypical rate.