IDEAS home Printed from https://ideas.repec.org/a/taf/raflxx/v4y2008i2p137-139.html
   My bibliography  Save this article

The minimum required rate of return

Author

Listed:
  • Samih Antoine Azar

Abstract

There is a puzzle in financial economics, called risk-free rate puzzle, named after Weil (1989). This puzzle consists of the observation that the risk-free rate is too low to be explained by actual consumption behaviour. Building upon previous research, and applying the concept of minimum compensation with expected utility, this article finds an equilibrium risk-free rate of 0.2% in real terms compared to an actual real risk-free rate of around 1%. Therefore, the puzzle is reversed; the actual risk-free rate is too high to describe investor sentiment.

Suggested Citation

  • Samih Antoine Azar, 2008. "The minimum required rate of return," Applied Financial Economics Letters, Taylor & Francis Journals, vol. 4(2), pages 137-139.
    • Handle: RePEc:taf:raflxx:v:4:y:2008:i:2:p:137-139
    DOI: 10.1080/17446540701564362
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/17446540701564362
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/17446540701564362?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:raflxx:v:4:y:2008:i:2:p:137-139. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/rafl20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.