The rate of return that is considered by investors to be the minimum rate they are willing to accept on non-government securities, such as investment-grade corporate bonds. This rate is linked to the interest rate of most recently issued comparable treasury securities. It is typically associated with the safest, risk-free non-government instruments and investments. As risk is added to non-government securities, an up-charge or premium is also added on to reflect additional amount of risk. Therefore, non-treasury investments bear an interest rate that is higher than the benchmark rate, of course in proportion to the deal of risk involved.
This rate is also known as the base interest rate.
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