The Risk Free Rate of Return Is Equal to the Rate

question 65

True/False

The risk free rate of return is equal to the rate of return minus the expected inflation rate.

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Definitions:

Discount Factor

A multiplier used in discounted cash flow analysis to present value future cash flows.

Discount Rate

In finance, the interest rate used to discount future cash flows to their present value, often reflecting the risk or time value of money.

Opportunity Cost

The cost of missing out on the next best alternative when making a decision.

Present Value

The current value of a future sum of money or stream of cash flows, given a specified rate of return.