Hi All, while reading portfolio management SFM i got a small doubt.
Can a risk free investment rate be in negative? say during the days of economic down turn or during deflation etc
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Risk free rate in negative?
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Ofcourse, The interest rates can be negative in the event of deflation. Though such cases are rare but that does not mean it cannot happen. In this system, bank charges you certain rate for keeping your money. By interest rates i mean nominal interest rates. For more information:
https://en.wikipedia.org/wiki/Interest_rate#Negative_interest_rates
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