Required rate of retu意思
"Required rate of return" or "hurdle rate" is a term used in finance to describe the minimum rate of return that an investor expects to earn on an investment. This rate is used as a benchmark to evaluate the potential returns of an investment before deciding whether to proceed with it. The required rate of return takes into account the time value of money, the risk associated with the investment, and the investor's personal financial goals and preferences.
Investors typically calculate their required rate of return by considering several factors, including:
- The risk-free rate: This is the return offered by investments with no risk, such as U.S. Treasury bills.
- The risk premium: This is the additional return an investor expects to earn for taking on risk. The risk premium varies depending on the level of risk associated with the investment.
- The investor's personal financial goals and preferences: These can include the investor's desired rate of return, their investment horizon, and their tolerance for risk.
Investors use the required rate of return to evaluate the attractiveness of an investment. If the expected return on an investment is less than the required rate of return, the investor may decide not to invest in that particular opportunity. On the other hand, if the expected return exceeds the required rate of return, the investor may consider the investment to be a good value and decide to proceed with it.