Government bonds are used as a broadly risk-free asset against which other financial instruments are priced (see article).
That is not bad for a risk-free asset with a maturity of one to six years in theory, and often only a few months in practice.
Unfortunately, because QE involves the exchange of one risk-free asset (bank reserves) for another (Treasury securities), QE does nothing to increase the amount of risk-free assets available to the market.
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Mutualising part of the national debts would create a risk-free European asset.
All sorts of asset transfers are tax free when they take place in connection with the dissolution of a marriage.
Here is a better way to value stocks: First, the investor should weigh the cost of capital against the firm's stream of current and future free cash flows to determine the asset's value.
Founder Anthony March, who also runs the National Private Annuity Trust, says he's got a legal way to make the installment payments largely tax free: The seller transfers the asset to March's charitable "foundation" and gets back payments.
When the GRAT's term ends, the asset goes to the beneficiaries free of gift or estate tax on the appreciation, even though it has been transferred.
For others, commission-free ETFs may lead to increased tinkering with asset allocations, to the detriment of long-term returns.
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With its asset-light, debt-free business model, the transport and logistics company is taking advantage of lower costs and prices, buying up businesses and stretching its reach to become the premier courier service linking the emerging and fast growing Asian and African economies.
The trust can distribute income to beneficiaries (who will pay income tax on these distributions of income), but principal is preserved, asset-protected and grows tax-free.
Importantly, while some institutional investors and asset managers have strongly opposed terror-free investing, as the Wall Street Journal observes, that has not been the case with all public pension systems.
The value of an operating asset are the net present value of expected free cash flows discounted to infinity.
As a result the most important variables to the price of an asset are the level and future shape of free cash flows, and the discount rate used, which, as you rightly point out, can be analysed in terms of risk premium.
So-called grantor-retained annuity trusts, or GRATs, let people give a portion of an asset's future profits to heirs tax-free.
Areas that tend to gum up the works: asset sales, perks (such as tax-free public transit cards), tax-free transactions, outside partnership income and deferred compensation.
As for risky markets, there is some uncertainty over a longer term, when most asset pricing models use the US rates as the risk free rates.
The use of the Fed to peg nominal interest rates at artificially low levels, fine tune the yield curve, incentivize risk taking, monetize government debt, and inflate selected asset prices by allocating credit are deviations from sound money and free markets.
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But in reality, deflation is the free-market approach to rectify a secular period of superfluous money supply growth, debt accumulation and asset price appreciation.
Only a few short years ago, many financial planners insisted that stocks become virtually risk-free if you just hold on to them long enough, guaranteeing you a higher return than any other asset.
There is such a thing as a free lunch, sometimes, and it's closed-end funds trading at big discounts to net-asset value.
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