Riskless rate
The rate earned on a riskless investment, typically the rate earned on the 90-day U.S. Treasury Bill.
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Archive for the 'R Glossary' Category
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Riskless or risk-free asset
An asset whose future return is known today with certainty. The risk free asset is commonly defined as short-term obligations of the U.S. government.
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Riskless arbitrage
The simultaneous purchase and sale of the same asset to yield a profit.
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Risk-free asset
An asset whose future return is known today with certainty.
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Risk-adjusted return
Return earned on an asset normalized for the amount of risk associated with that asset.
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Risk-adjusted profitability
A probability used to determine a “sure” expected value (sometimes called a certainty equivalent) that would be equivalent to the actual risky expected value.
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Risk premium approach
The most common approach for tactical asset allocation to determine the relative valuation of asset classes based on expected returns.
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Risk premium
The reward for holding the risky market portfolio rather than the risk-free asset. The spread between Treasury and non-Treasury bonds of comparable maturity.
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