The risk-free return is then subtracted from the return of the asset being analyzed.

The risk-free return is constant.

The rating is achieved by subtracting the risk-free return on a three-month Treasury bill from a fund's monthly returns.

Investors with different risk/return goals can use leverage to increase the ratio of the market return to the risk-free return in their portfolios.

In other words, if the deal were a sure thing, there's a rather nice risk-free return just sitting there waiting to be picked up.

The market return minus the risk-free return is the risk premium that investors expect for investing in the market portfolio.

The administration based this offset - sometimes called a clawback - on the supposedly risk-free average return on Treasury bonds.

Now a small but persistent band argues that the risk-free returns on Mexican paper could prove illusory too.

And a higher risk-free return, such as on Treasury bonds, leads to a lower fair value for stock prices.

R is the risk-free return, or the return from government securities, as government securities have no risk.