Discover what the risk-free rate of return is, how it influences investments, and if a truly risk-free return exists. Explore ...

The risk-free rate is the rate of return offered by an investment that carries zero risk. Every investment asset carries some level of risk, however small, so the risk-free rate is something of a ...

The risk-free rate is also important for calculating the Sharpe ratio. This analytical tool is used to evaluate the risk-adjusted returns on a single security or an entire investment portfolio.

How to Calculate RRR RRR is set by considering the risk-free rate, which is typically represented by government bond yields, and adding a risk premium that assesses the extra return expected of an ...

To calculate this ratio, determine the difference between an investment's average return rate and the risk-free rate. Then divide this figure by the standard deviation of negative returns.