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Risk-free Rate
The return on investment considered completely free of risk, such as the return on government bonds in stable financial systems.
Economic Factors
Various elements such as inflation, unemployment rates, and GDP growth that influence the economic environment.
Diversified Portfolios
Investment strategies that spread investments across various assets to minimize risks associated with any single investment.
Equilibrium Risk Premium
The expected return on a risky asset over the risk-free rate that brings the supply and demand for the asset into balance.
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