What Is The Riskfree Rate? A Search For The Basic Building Block
Source: Stern School of Business
In corporate finance and valuation, the authors start off with the presumption that the riskfree rate is given and easy to obtain and focus the bulk of the attention on estimating the risk parameters of individuals firms and risk premiums. But is the riskfree rate that simple to obtain? Both academics and practitioners have long used government security rates as riskfree rates, though there have been differences on whether to use short term or longterm rates.