Every investment involves a possible gain and a possible loss. The risk/reward ratio compares how much you could lose to how much you could gain. Calculating this ratio may help you decide whether a ...

Risk-free return represents the theoretical yield on a perfect investment with zero risk. Learn how it's calculated and ...

The risk-free rate is the rate of return offered by an investment that carries zero risk. Every investment asset carries some level of risk, however small, so the risk-free rate is something of a ...

Investors demand higher returns from illiquid assets due to greater selling difficulty. Liquidity premium can be calculated by comparing yields of similar liquid and illiquid bonds. Real risk-free ...

Excess return refers to the return on an investment that surpasses the return of a benchmark or a risk-free rate. It measures the performance of an investment in relation to its expected or required ...

High risk-adjusted returns suggest efficient performance for the invested capital. Low risk-adjusted returns indicate potentially suboptimal investments. Comparing risk-adjusted returns helps select ...