In financial analysis, may represent lost opportunities, such as the risk-free rate of return on a government, municipal, or corporate bond.
Therefore the overall rate of return is simply the risk-free rate of interest.
First, it may be that the market is anticipating a rise in the risk-free rate.
Both measures use the risk-free rate to obtain the risk premiums for the funds under analysis.
The 90 day treasury bill rate was used as a proxy for the risk-free rate of interest.
The risk-free rate is constant over the life of the option.
The government bond rate can be seen as a proxy for the risk-free rate.
The higher this risk-free rate, the more valuable the option - and the higher its estimated cost.
This line starts at the risk-free rate and rises as risk rises.
The lowest of all is the risk-free rate of return.