What is true about the risk free rate?
A) The risk free rate represents the interest an investor would expect from an absolutely risk free investment over a specified period of time.
B) The risk free rate is the minimum return that an investor expects for any investment. A rational investor will not accept any additional risk unless the potential rate of return is greater than the risk free rate.
C) The risk-free rate does not truly exist because even the safest investments carry a very small amount of risk.
D) All of the above.
Correct Answer:
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