Risk-Free Asset


Risk-Free Asset
An asset which has a certain future return. Treasuries (especially T-bills) are considered to be risk-free because they are backed by the U.S. government.

Because they are so safe, the return on risk-free assets is very close to the current interest rate.
Many academics say that there is no such thing as a risk-free asset because all financial assets carry some degree of risk. Technically, this may be correct. However, the level of risk is so small that, for the average investor, it is OK to consider U.S. Treasuries or Treasuries from stable Western governments to be risk-free.


Investment dictionary. . 2012.

Look at other dictionaries:

  • risk-free asset — also: riskless asset An asset whose future normal return is known today with certainty. Bloomberg Financial Dictionary …   Financial and business terms

  • Risk-free asset — An asset whose future return is known today with certainty. The New York Times Financial Glossary …   Financial and business terms

  • 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. The New York Times Financial Glossary …   Financial and business terms

  • Risk-free interest rate — The risk free interest rate is the interest rate that it is assumed can be obtained by investing in financial instruments with no default risk. However, the financial instrument can carry other types of risk, e.g. market risk (the risk of changes …   Wikipedia

  • risk-free rate of return — The rate of return on an investment that has no risk. The return on US and UK Treasury bills is often regarded as a very close approximation to this rate. The risk free rate is an important concept in the capital asset pricing model …   Accounting dictionary

  • risk-free rate — The rate of return on an investment that has no risk. The return on US and UK Treasury bills is often regarded as a very close approximation to this rate. The risk free rate is an important concept in the capital asset pricing model …   Big dictionary of business and management

  • Risk-free rate — The rate earned on a riskless asset. The New York Times Financial Glossary …   Financial and business terms

  • risk-free rate — The rate earned on a riskless asset. Bloomberg Financial Dictionary …   Financial and business terms

  • Risk aversion — is a concept in psychology, economics, and finance, based on the behavior of humans (especially consumers and investors) while exposed to uncertainty. Risk aversion is the reluctance of a person to accept a bargain with an uncertain payoff rather …   Wikipedia

  • Risk premium — A risk premium is the minimum amount of money by which the expected return on a risky asset must exceed the known return on a risk free asset, in order to induce an individual to hold the risky asset rather than the risk free asset. Thus it is… …   Wikipedia


Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.