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Social-cognitive learning theorists and behaviorists would agree that:
Real Risk-Free Rate
The rate of return on a risk-free investment, such as government treasury bills, adjusted for inflation, representing the true earning power of the investment.
Expected Inflation Rate
The predicted average rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling.
Market Risk Premium
The additional return that investors demand for holding a risky market portfolio instead of risk-free assets.
Required Rate Of Return
The required rate of return is the minimum annual percentage earned by an investment that will induce individuals or companies to put money into a particular security or project.
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