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anonymous

  • 5 years ago

Hi, how is riskfree rate arrived at?

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  1. anonymous
    • 5 years ago
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    In short: it's a risk-free alternative investment (for example a government default free bond), and thus also an oppertunity cost.

  2. anonymous
    • 5 years ago
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    An other way of lloking at it is as a combination of the expected real rate of the economy and the expected inflation. It is attached to the currency meaning the USD risk-free rate is distinct from euro risk-free rate and definitely different from INDIAN currency risk-free rate.

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