Question: What does the term risk-free interest mean, and why do we usually use the U.S. Treasury bill yield as the risk-free rate?

What does the term risk-free interest mean, and why do we usually use the U.S. Treasury bill yield as the risk-free rate?

Step by Step Solution

★★★★★

3.49 Rating (159 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock

Riskfree interest is really a guaranteed interest rate that is paid with certainty at the ... View full answer

blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Document Format (1 attachment)

Word file Icon

296-B-F-F-M (2443).docx

120 KBs Word File

Students Have Also Explored These Related Finance Questions!

Q:

What does the term risk mean?

Q:

What does the term social reality mean and why are accounting and accounting theory important examples of it?

Q:

What does the term contribution margin per unit mean? How is the contribution margin used in cost analysis to support managerial decisions?

Q:

What does the term risk-free interest mean, and why do we usually use the US. Treasury bill yield as the risk-free rate

Q:

What does the term risk-free interest mean, and why do we usually use the U.S. Treasury bill yield as the risk-free rate?

Q:

Old MathJax webview Old MathJax webview Options question 116% today is September 26, and you are considering buying one call option expiring or 26. You need to estimate the risk-free interest rate...

Q:

Compare and contrast the exercise procedure for stock options with that for index options. What major advantages does exercising an index option have over exercising a stock option?( refer attached...

Q:

1. Suppose today is September 26, and you are considering buying one call option expiring on October 26. You need to estimate the risk-free interest rate for that option. You obtain the following US...

Q:

1. Suppose today is September 26, and you are considering buying one call option expiring on October 26. You need to estimate the risk-free interest rate for that option. You obtain the following US...

Q:

Pick a stock (It can be any stock, as long as it is a common stock traded in NYSE/Nasdaq/Amex). (1) Obtain its 5-year historical daily prices (1/1/2013 12/31-2017) on Yahoo finance and calculate its...

Q:

Sandra Janoff and Marvin Weisbord are the original developers of the Future Search method and are the founders of the Future Search Network. Corporations pay a lot of money for their services, but...

Q:

Assume that one euro can be exchanged for 1.20 U.S. dollars. What is the exchange rate if the exchange rate is quoted directly? Indirectly?

Q:

The advantages of assets based securities include the followings: Multiple select question. likely to carry higher credit rating guarantee that full amount of receivables be paid allows issuing firm...

Q:

According to MLBPA v. Garvey, what is the standard for a court to use to vacate an arbitra- tor's award?

Q:

When might it be detrimental to a company to have too many items in inventory? When might it be detrimental to have too few?

Q:

For the coming year, Rian Company wants to reduce its average production cycle to thirty days. If the target- ending inventory for 2015 is $61,000, what cost of goods sold will the company need to...

Q:

Rian Company had a target of twenty days for the collection cycle for the year 2014. If total sales had remained at $970,000, how much of the sales revenue would have needed to be cash sales for the...

Q:

B . Performance of three optimization algorithms, momentum based gradient descent, RMSProp and ADAM are shown in different colors on the following loss landscape graph. Which color ( green / purple /...

Q:

Brook Corporation s free cash flow for the current year ( FCF 0 ) was $ 2 . 0 0 million. Its investors requirea 1 5 % rate of return on Brooks Corporation stock ( WACC = 1 5 % ) . What is the...

Q:

Harry and Flo Simone are planning to start a restaurant. Stoves, refrigerators, other kitchen equipment, and furniture are expected to cost $50,000, all of which will be depreciated straight line...