By the ________, we mean the rate on a loan whose borrower will not default on any obligation.

Question

Quizplus · Accepted Answer

The risk-free rate is the rate on a loan for a borrower who is considered to have no risk of defaulting on their obligations. This rate is often used as a benchmark for determining the cost of borrowing for other borrowers who are considered to be more risky. Choices B, C, and D are incorrect because they do not specifically address the concept of default risk.

By the ________, We Mean the Rate on a Loan