Are risk-free rates really risk free? What are the risks of government securities? Why do we still use government bond yields as our risk-free rates if they still carry risk?

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A: Bill Discounting is a business-related activity in which unpaid bills from a firm that are expected ...

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A:

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A:

Classification Of Risk

Risk means when there could be a possibility that the returns expected from a particular project or investment may or may not match the investor's expectations. In other words, the uncertainty of an income arising from a source that would either be lower than expected or result in losses in risk exposure of the project. The higher the risk involved, the higher is the return expected by the investor as the investor is exposed to a high level of risk. There are various methods by which different types of risk can be assessed and avoided or mitigated.