Business and Personal Finance Dictionary

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• RISK-FREE RETURN
  
  When you buy a US Treasury bill that matures in 13 weeks, you're making a risk-free investment in that there's virtually no chance of losing your principal (since the bill is backed by the US government) and no threat from inflation (since the term is so short). Your yield, or the amount you earn on that investment, is described as risk-free return. By subtracting the risk-free return from the return on an investment that has the potential to lose value, you can figure out the risk premium, which is one measure of the risk of choosing an investment other than the 13-week bill.
  
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