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Discount Rate
The interest rate charged to commercial banks and other financial institutions for loans received from a central bank's discount window.
Nondiversifiable Risk
A type of risk that affects all investments across a market and cannot be mitigated through diversification.
Capital Asset Pricing Model
A theoretical framework used to determine the expected return on an investment by accounting for its inherent risk, usually represented as the risk-free rate plus the risk premium.
Risk Premium
Maximum amount of money that a risk-averse individual will pay to avoid taking a risk.
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