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News Link • Government Debt & Financing

You ever hear of the risk-free rate?

• The Political Commentator
The risk-free rate is also known as the 3-month U.S. treasury bill! What happens if and when there is no risk-free rate? Will that happen when the United States is downgraded from AAA? What will happen to the CAPM? When I was in business school one of the major concepts included an esoteric formula known as CAPM, or the capital asset pricing model. Long story short the CAPM was a risk/reward tool through which an investor could determine whether the expected return from an investment was worth the risk of that investment.

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