For a return to be considered risk-free over some future time period it must be free of default risk and there must not be any uncertainty about the reinvestment rate (i.e., the rate of return that can be earned at the end of the investor's holding period).

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A return is considered risk-free if it is free of default risk and reinvestment rate risk. This means that the investor can be certain that they will receive their expected return and will be able to reinvest it at a known rate.

For a Return to Be Considered Risk-Free Over Some Future