Sentences with phrase «risk equals the rate»

(4) Huge risk that doesn't match the rate of return: I'll explain more below, but the tax drag, cash drag, and withdrawal fee all reduces your rate of return by so much that I can't see anyway that your risk equals the rate of return.

Not exact matches

They also use risk - based pricing to issue loans with rates that are equal or slightly higher than banks.

Given the high allocation to Attractive - or - better rated stocks, and equal allocation to Unattractive - or - worse rated stocks relative to the benchmark XLF, KIE appears well positioned to capture upside potential while taking on an average level of downside risk.

All else equal, unless it possesses some sort of major offsetting advantage that makes the risk of non-payment low, a company with a low - interest coverage ratio will almost assuredly have bad bond ratings, increasing the cost of capital; e.g., its bonds will be classified as junk bonds rather than investment grade bonds.

If a particular risk, like interest - rate risk, is unattractive in a cross-sectional comparison of opportunities, there is no reason to give it equal prominence.

The risk - free interest rate is based on the implied yield currently available on U.S. treasury notes with terms approximately equal to the expected life of the option.

Risk Free Interest Rates — These rates are based on the implied yield currently available on U.S. Treasury notes with terms approximately equal to the expected life of the opRates — These rates are based on the implied yield currently available on U.S. Treasury notes with terms approximately equal to the expected life of the oprates are based on the implied yield currently available on U.S. Treasury notes with terms approximately equal to the expected life of the option.

Because the risk - free interest rate is closely related to the real neutral rate, and because the real neutral rate has been declining, it follows that hurdle rates should also be lower, all else being equal.

For the relationship between dividends and the equity risk premium, they assume the difference between dividend - price ratio and risk - free rate equals equity risk premium minus expected dividend growth rate.

Although most types of bonds share some common features, such as a fixed interest rate and a maturity date, they are not all equal in terms of income potential and risk.

Currently, BBB - rated bonds are equal to 45 % of the entire outstanding high - yield market, which has increased from 30 % a decade ago.3 Since BBB is the lowest investment - grade bond rating, the risk is that many poor credits will fall, like angels, from the investment - grade into the high - yield universe.

Just because CNN is too ratings - whipped to risk offending ANYONE, doesn't mean that all ideas actually do deserve equal respect.

Patients 65 - and - older had a 3.4 percent lower risk of mortality with equal rates of being favorably discharged.

In the differential inflation approach, using the US dollar risk - free rate as the starting point, you are assuming a global real risk free rate, set equal to that rate embedded in the US treasury bond rate as the base for all local currency risk free rates.

The ETF also divides the preferred shares into five equal «rungs» so they mature between one and five years from now, further lowering interest - rate risk.

The CAPM model says that the expected return of a security or a portfolio equals the rate on a risk - free security plus a risk premium.

The Base Flood Elevation, or BFE shown on the Flood Insurance Rate Map (FIRM) for high - risk flood zones indicates the water surface elevation resulting from a flood that has a one percent chance of equaling or exceeding that level in any given year.

And more risk often equals higher interest rates and less favorable terms for the credit we seek.

The subsequent low - volatility screening is designed so that bonds with less risk, as demonstrated by their trading pattern, are selected, while duration and credit rating are held equal.

Re = Rf + β * ERP where Re = expected return on equity Rf = risk - free rate β = beta coefficient, by definition equal to 1 for the equity market

Some people use leverage, borrowing money at a low rate, to be able to buy a larger amount of a low - risk portfolio, making its beta equal to that of the index.

For nearly every target rate of return, a diversified portfolio of minimally - correlated investments can be constructed that will be lower risk than one investment with equal expected return.

Under this model, the discount rate is equal to the sum of risk - free rate and risk premium.

Beta is an input into the capital asset pricing model (CAPM) where the expected return of an asset is calculated based on its beta (ß), returns expectations, and a risk - free rate equal to the following:

If we assume that the risk - free rate is a 3 - month US Treasury (10 - year US Treasury is also common) and equal to 1.50 %, the portfolio beta is 1.60 (60 % more systematic risk or volatility than the benchmark), the benchmark has returned 10 % annualized, and the portfolio return is 20 %, we have:

Second, the intercept should be equal to the risk - free rate.

Here's the way I look at it: if you've already incurred the debt, an extra debt repayment is an investment an after - tax and almost risk - free return equal to the interest rate on your debt.

Investors have the option to either a) hold the ETFs until maturity, in which case the principal amount invested will be returned on the date of maturity plus regular coupon payments or, b) liquidate their positions before the maturity date if the need for cash arises, in which case they will be subject to receive payments equal to the current market price of the shares (which is subject to interest rate risk) times the number of shares bought plus any coupon due.

Of course no savings account pays anywhere near 3 % today, but if you have student loans, think of them as risk - free investment opportunities with a guaranteed rate of return equal to the interest rate you're paying.

A table rating will equal higher premium costs to offset the risks the life insurance company is taking by insuring you.

Individuals with above average «ratings» are generally classified as «preferred, «and all things being equal will pay lower premiums than individuals that are» standard» or «sub-standard» risks.

There are also certain companies that specialize in insuring high - risk drivers, rates for drivers with DUIs are usually double, triple or more than a driver without a DUI, all other things being equal.

Mortality Charges: Mortality charge is equal to Sum at Risk (SAR) * applicable Mortality Rate for the month, based on the attained age of the Life Assured.

Mortality Charges: Mortality charge is equal to Sum at Risk (SAR) * Mortality Rate for the month, as per the attained age of the Life Assured.

The guaranteed rate varies by the risk profile chosen and is equal to 0.5 % p.a, 1.5 % p.a and 3.0 % p.a. for Aggressive, Moderate and Conservative risk profiles, respectively.

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Thus, if local market conditions are good, that is, if the vacancy rate is low, demand is growing faster than supply, and rents are rising, then investors will perceive that the risk of property ownership is lower and the required rate of return, and, hence the discount rate, will be lower, all else being equal.