The Two Components That Make Up the Risk-Free Rate Are

question 90

Multiple Choice

The two components that make up the risk-free rate are:

• A)real rate of return and capital gains.
• B)risk-free assets and capital gains.
• C)real rate of return and the inflation factor.
• D)real assets and the inflation factor.
• E)capital gains and the inflation factor.

---

Definitions:

Practice

The repeated exercise or application of an activity or skill to acquire or maintain proficiency in it.

NPV

Net Present Value, a calculation used to determine the current value of a series of future cash flows.

IRR

Stands for Internal Rate of Return, a financial metric used to estimate the profitability of potential investments by calculating the discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.

Negative

A term used to describe values below zero, or situations characterized by absence or lack rather than presence or availability.