Dictionary of Finance and Investment Terms: risk-free return
risk-free return
yield on a risk-free investment. The 3-month Treasury bill is considered a riskless investment because it is a direct obligation of the U.S. government and its term is short enough to minimize the risks of inflation and market interest rate changes. The Capital Asset Pricing Model (CAPM) used in modern portfolio theory has the premise that the return on a security is equal to the risk-free return plus a risk premium.
