The interest rate that would exist on a riskless investment/ security, given that expected inflation is zero. Such a rate doesn’t exist in real life, and the nearest estimation is the interest rate on short term securities issued by credit-worthy governments in an inflation-free setting. In real world, the real risk-free rate is said to range between 1% and 5%, or more depending on the risk magnitude in the broader environment.
![Fincyclopedia Fincyclopedia](https://fincyclopedia.net/wp-content/uploads/2019/11/Logo-for-Web-01.png)
Comments