Real Risk-Free Rate of Return: Key Factors for CFA Level 1 Exam Preparation

Factors Affecting the Real Risk-Free Rate of Return for CFA Level 1 Exam

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The real risk-free rate of return depends most on

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A. B. C. D.

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The real risk-free rate of return does not take inflation into account (in contrast to the nominal risk-free rate). It should depend on the real growth rate of the economy because the capital invested should grow at least as fast as the economy. The rate can also be temporarily affected by tightness or ease in the capital markets.

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