Risk-Free Interest Rate

Definition:

Describes return available to an investor in a security somehow guaranteed to produce that return. The risk-free interest rate compensataes the investor for the temporary sacrifice of consumption.

Investing Essentials


Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University

Term of the Day

Trade on top of

Trade at a narrow speed or no spread in basis points relative to some other bond yield, usually Treasury bonds.

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