Risk-free rate
The return on an investment with as little risk as possible, usually taken as the yield on long-term government bonds in the same currency.
The risk-free rate is the starting point for required returns: investors in riskier assets expect more than it. It changes with interest rates in the economy, so take it from a current official source when valuing.
Learn more in these lessons
- Discount rates and the cost of equityHow do you choose a discount rate for valuing a company's shares?
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