A) real risk-free interest rate
B) real-risk free nominal rate
C) real-risk free quoted rate
D) real-risk free nominal premium
✅ ANSWER: A
Rate denoted as r* is best classified as real risk-free interest rate. The Risk-Free Rate of return is the interest rate an investor can expect to earn on an investment that carries zero risk.
Rate denoted as r* is best classified as real risk-free interest rate. The Risk-Free Rate of return is the interest rate an investor can expect to earn on an investment that carries zero risk.